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SAN FRANCISCO 
HISTORY CENTER 

3 CM 

FSI 

Saw Francisco Public Library 
STACKS 



REFERENCE BOOK 

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PROCEEDINGS 



OF THE 



FIRE UNDERWRITERS' 



ASSOCIATION OF THE PACIFIC, 



FOR THE 



Tears 1877 and 1878, 



AT 



SAN FRANCISCO, 



CALIFORNIA. 



SPAULDING, BARTO & CO., STEAM BOOK AND JOB PRINTEKS, 

414 Clay Street, San Francisco. 
1878. 



OSl 



sir 



HISTORY OF ORGANIZATION 



THE great fire in Virginia City, Nev., in 
October, 1875, necessitated the service of 

some thirty-four adjusters for Companies 
doing business on this Coast, and the "Fire 
Underwriters' Association of the Pacific" was 
the legitimate outgrowth of that gathering. For 
mutual protection and to facilitate the adjust- 
ment of the many losses there, a meeting was 
called for October 28th, in the "Palace Car" 
which was sidetracked and occupied by many 
of the fraternity, at which Mr. B. F. Low was 
made chairman, and J. W. Staples, Secretary. 
Meetings were held from day to day and 
proved of great advantage to all concerned. 

At the meeting of November 13, 1875, the 
idea of a permanent organization took definite 
shape, by the adoption of resolutions perpetu- 
ating the Association as a " means of dissem- 
inating valuable information and elevating and 
promoting the interest of its members." A 
committee consisting of L. L. Bromwell, H. H. 
Bigelow and J. R. Garniss, was appointed to 
draft a Constitution and By-Laws, who made 
their report at a meeting called for the pur- 
pose and held in San Francisco, February 23, 
1876, at which time the present Association 
was permanently organized. 

Founded on the broadest principles of 
united effort, the Pacific Association has cor- 
rected abuses, induced thought, fostered cor- 
rect practices, produced valuable essays and 
statistics, and from its very inception has 
steadily increased in members and influence. 








PROCEEDINGS 



OF THE 



FIRST ANNUAL MEETING 



OF THE 



FIRE UNDERWRITERS' ASSOCIATION 

OF THE PACIFIC. 



! " 



The First Annual Meeting of the Fire Underwriters' Associa- 
tion of the Pacific was held in the room of the Underwriters 
Fire Patrol, at two o'clock p. m., Tuesday, February 20th, 1877. 

The meeting was called to order by L. L. Bromwell, Esq., 
Chairman of the Executive Committee, and upon call A. R. Gun- 
nison, Esq., was elected Chairman pro tempore, and thereupon was 
conducted to the chair, when the regular order of business was 
in form — the roll being called, and on motion, the reading of the 
minutes of previous meeting was dispensed with. 

Letters from Chas D. Haven and C. T. Hopkins, of the Fire 
and Marine Boards, were read by the Secretary, when Mr. Jacobs 
offered the following preamble and resolutions : 

Whereas, The Secretary of the Board of Fire Underwriters of San Fran- 
cisco having notified this Association that the Board at their last meeting, by 
a unanimous vote, granted the use of their room for the meetings of this 
Association, free of charge, on any day when not in use by the Fire and Ma- 
rine Boards of Underwriters, and the Marine Board having, by resolution, 
concurred in the above; and 

Whereas, The Secretary having also received from Messrs. Chas. E. Bliven 
and J. B. Benuett, copies of proceedings of the Association of the Northwest 

d speech by Mr Bennett; therefore, be it 



Resolved, That the thanks of this Association be and are hereby extended to 
the Boards of Fire and Marine Underwriters for the prompt, cheerful and 
unanimous vote, to allow this Association the free use of their room for 
the meetings of this Association, when not in use by the Boards of Under- 
writers. 

Resolved, That the regular monthly meetings of this Association be held in 
the room of the Board of Fire Underwriters of San Francisco, on the third 
(3d) Tuesday of each month, at two (2) o'clock p. m. 

Resolved, That the Secretary be directed to inform the Boards of Fire and 
Marine Underwriters of the foregoing. 

Resolved, That the thanks of the Association are due for the courtesy shown 
by Chas. E. Bliven, Esq., President of the Association of the Northwest, in 
sending copies of proceedings of the Assosiation of the Northwest for the 
years 1875 and 1876. Also, to J. B. Bennett, Esq., for copies of his- valuable 
address to the Association of the Northwest. 

Adopted. 

Committee on Eevision of Constitution and By-Laws handed 
in a revised Constitution and By-Laws, which was read, and on 
motion of Mr. Dornin, was ordered received, and that it be 
printed and proof-sheets be handed each member, to be reported 
upon at next meeting. 

Adopted. 

Mr. Bromwell, of Committee on Losses and Adjustments, 
then delivered the following 

ADDEESS: 

Mr. President and Gentlemen of the Fire Underwriters' Association of the Pa- 
cific — By way of apology for the imperfections of this our exordial report, we 
desire to mention that it was conceived m doubt and born in haste, owing 
to the absence of our chairman, whose varied and protracted experience 
would have, no doubt, added largely to your entertainment and our credit as 
a committee. Depending on this source for our annual report, it was not un- 
til a few days since that our Secretary placed the responsibility on shoulders 
keenly alive to their inherent feebleness. 

One year ago, our Association was organized for the principal object of pro- 
moting harmony and good practice among the adjusting profession; the orga- 
nization was prompted by the apparent advantages emanating from the free 
interchange of opinions, the consolidating of interests as improving on the 
limited influence of individual effort and the expeditious handling of losses 
as witnessed after the memorable Virginia City fire just preceding. 



It is not drawing too largely on our imagination to assert that some of the 
benefits of the Association have already been experienced; the discussion of 
practical topics has proven energizing and valuable, confidence in each other 
enhanced by closer communion and acquaintance; but better than all else, 
this affiliation is a rapid and determined stride towards making the position of 
an adjuster as respected as it certainly is respectable. We regard this latter a 
most natural affinity of the science, and worthy of the thoughtful considera- 
tion of this Association. 

A great deal has been said at one time or another of the follies or indiscre- 
tions of the inexperienced and the evil effects of such practitioners on the 
general profession. Admitting that proficiency has its cost, it certainly had a 
beginning also, and our younger brethren, impressed with the trials and re- 
sponsibilities of their position, are seldom lacking in that good common sense, 
the pre-requisite of success in this as much as any other calling. 

To such we extend the "right hand of fellowship," simply asking in ex- 
change the adoption of honorable practice, the exercise of candid good faith 
and those genuine courtesies which are after all, the crystallization of a busi- 
ness gentleman's composition. 

But there is another class, few in number, and " growing beautifully less " 
every day, who do more to damage the profession in one day than a regiment 
of adjusting novices in a life-time. 

We refer to men possessing abilities above the average, and who cannot hide 
behind the silky apologies of incompetency or misunderstanding — that class 
whose predilections seem to favor a debased appetite for salvage at whatever 
sacrifice, and who actually barter and sell principle, honor and manhood- 
men who partake of a hollow joy in the nefarious and detestable trickery 
which characterizes the vulgar "Smart Alex," in loss adjustments, even to 
the bespattering and betraying of their more honorable duty-following asso- 
ciates. 

This is strong language; but the picture is not overdrawn if we consult 
even our very modern observations. 

It is gratifying, however, that such "moral obliquities" are fast being 
choked off, and as a final assistance to their down grade, we suggest that this 
Association adopt stringent measures toward depriving such characters of the 
benefits of membership, whenever any patent unprofessional conduct or dis- 
honorable practice is proven, and that expulsion means uncompromising, 
official non-intercourse thereafter. 

Your committee hoped at this meeting to have presented for your consider- 
ation some uniform rule for guidance in apportioning and contributing losses 
under non-concurrent contracts, and which your adoption would give the im- 
press of authority, and meet with general endorsement and practice so far as 
this Coast is concerned. 

The absolute necessity of some such standard is becoming more and more 
apparent, as the business extends and losses multiply. 

The trade of this department is so limited, that our companies have, to a 
great extent, avoided these perplexing problems, and yet they will crop out, 



and set the adjusters maneuvering at once, with the siugle object in view of 
figuring the contributing policies with the bulk of the loss. Then follows a 
multitudinous array of arithmetical talent, supported by a long line of author- 
ities and precedents. Finally the whole case is submitted to arbiters, who 
generously slice the matter by concessions, and in the vain attempt to please 
everybody, succeed only in dissatisfying everybody interested. 

It is surprising that at this late day no acceptable uniform application, or 
if necessary, a variety of applications, suiting the equities of every conceiva- 
ble circumstance, has resulted from the large experience and extensive thought 
given the subject by many master minds of the profession. 

As the most effective means of reaching so desirable and apposite a result, 
we recommend the associate effort of this entire organization, and hope suffi- 
cient interest in the subject will be manifested as to invite repeated references 
to it during our regular meetings throughout the year. Frankly acknowledg- 
ing a dereliction of duty in this respect, your present committee would sug- 
gest to their successors in office earnest endeavors (aided by the general 
co-operation of the Association), toward consummating, before our next an- 
nual meeting, some concerted, definite plan for harmonizing apportionments 
under non-concurrent tangled-up policies. 

There is another subject, only second in importance, in our opinion, to the 
smoothing away of apportionment under non-concurrent policies: it is the 
aptitude of the adjuster, especially if he is endowed (as he generally is) with 
too much large-heartedness, to confound philanthropy with business, mag- 
nanimity with equity, policy with even-handed justice! 

Wrapt up with a conscientious desire to popularize his principals, a dan- 
gerous precedent is established, affecting not only himself, but permeating the 
future adjustments of that particular section. In this connection it is seen 
how interested the whole profession must or should be, in every individual 
member thereof. No sacrifice or concession, the effect of which is likely to 
hamper or paralyze our associates, ought to be considered, much less acted 
upon. 

Such popularity is purchased at too extravagant figures. It is acquiescence 
in a wrong, likely to redound. It is a surrender of principle and a parting 
with manly conviction. It involves treacherous precedents It is a cowardly 
avoidance of duty. It is a shirking of responsibility, and a shortsightedness 
so insidious that yeais may intervene before its evil effects are felt and appre- 
ciated. 

At best, the adjuster's position is one of trial, responsibility and care; it 
means patient waiting and constant work, clear and comprehensive understand- 
ing, diligent application and study, which ceases only when the Almighty 
Adjuster calls for a reckoning. Surrounded by popular clamor on the one 
side, a sensitive, commission-loving agent on the other, while the contract and 
a sense of duty stare him in the face, the drawing of a line tempered with 
justice, reason and consistency, is one of the very fine duties imposed by the 
position of loss-adjusting. 

Right here we wish to revert to a piece of delusion which many of our pro- 



f essional brethren harbor and indulge in — ■ ' natural knack. ' ' There is no such 
thing in this business. We venture to say the most experienced find prepa- 
ration and training quite as essential to-day as it was years ago, in managing 
important losses. Only the painstaking and cautious unearth the novelties 
and overcome the obstacles of this, the most intricate business in the com- 
mercial world. 

In conclusion, somebody has said, " fire is a great renovator, " and we might 
add, as applicable to our interests, a great lubricator also. The general con- 
flagration which suggested our organization, improved the status of the ad- 
justing corps, and prompted the cultivation of a broader plane of thought 
and action. It has brought us closer together, and tends to the drowning out 
of jealousies. It makes us more liberal and just with each other, and as we 
go from here and enter the future orbits our places and positions demand of 
us, let our aims be honest, sincere, praiseworthy, our pretensions modest, 
that when the final loss award is made and the last account of our steward- 
ship rendered, our memory will be kept green by the benefits bestowed in 
life, toward making honored our profession, even as it is regarded honora- 
ble. [Applause.] 

On motion the report was ordered received and placed on file. 

Then followed Mr. W. J. Landers, of the Committee on Forms 
of Policies, who offered the following 

RE POET: 

Mr. President, Fire Underwriters' Association of the Pacific and Gentlemen — 
Having been appointed Committee on Forms of Policy at the last annual 
meeting of the Association, we respectfully submit the following as our report : 

We felt at loss to know whether our duties were to be prosecuted in respect 
to the printed conditions of the various forms of policies now in use, or to 
the manner of writing or of wording policies. With reference to the first we 
would remark that, while the great majority of companies have happily united 
in the use of what is known as the National Board form, a number have forms 
which vary from each other, and also from the National Board form. It can- 
not be denieJ that the existence of these various forms, and the different 
rules of contribution, much complicates the work of an adjuster, and fre- 
quently results in a clash with the assured and between companies. In this 
connection it is safe to assume that the majority of losses are finally adjusted 
at the sacrifice of one or more conditions of the policy or policies interested. 
A. sustains damage by fire and water and removal, holding two or more poli- 
cies, one of which provides for damage by removal, and others are silent upon 
that point. It is a matter of great difficulty to ascertain how much of the 
damage was caused by water, and how much by removal. The companies 
naturally look for a segregation of the damage; one with a view of requiring 
the other companies and the assured to contribute under the removal clause, 



and the others with a view of avoiding any contribution on the damage by 
removal. Adjusters representing these clashing interests look askance at each 
other, and consider how they can best get around the assured and each other* 
and still preserve interests and friendships. Again, B. insures his retail stock 
of merchandise in two companies, and the same is damaged mostly in the 
show-windows; one company specially excepts goods in show- windows* 
while the other contains no such condition. The assured and the lat- 
ter company are averse to letting the former office off, inasmuch as they 
cover a stock of goods contained in the brick building, etc., and the show 
windows are entirely within the outside line of the wall, and urge as well the 
nullity of printed clauses over written words, etc. 

Various solutions of the above, under different circumstances, as well as 
other instances, might be cited, but the two are enough to illustrate the im- 
portance of all companies adopting a uniform policy. Adjusters would be- 
come much more efficient, and legal decisions in favor of companies more 
frequent. In addition, no room for the exercise of various rules of contribu- 
tion (in itself a great source of annoyance) would then exist, and insurance 
policies would grow in favor generally. As to the form of policy which would 
best serve the purpose sought, there is ample room, and much necessity for 
thought and wisdom. Our brethren of the Northwestern Association have 
looked into the matter of doing away with the present form of policies en- 
tirely; but as this is a stride we can hardly look for, we might rest content for 
a time if the form known as the National Board Form was adopted by ail. 
We recommend that the influence of this Association be brought to bear in an 
appropriate manner on all offices where other forms are in use, with a view of 
bringing about the desired change. The writing of policies, as practiced in 
various offices, is not, in our opinion, altogether commendable; too much 
care in framing such a contract cannot be taken. Some offices allow inexpe- 
rienced country agents to write policies; but your committee do not desire to 
attack a system to which many of the Association are closely allied. On the 
other hand, many of the offices place the writing of policies in the hands of 
their most inexperienced clerk or boy. We call to mind several instances 
where the ready judge and too willing juries have decided against companies 
on the ground that the language of the written portion of their contract was 
too vague to admit of plain interpretation. In this particular your committee 
would recommend a change, and urge the desirability of this Association, 
through its individual members, exerting an influence toward having policies 
written by persons more familiar with the significance of words and punctua- 
sion, in this, the most important part of an insurance contract. [Applause.] 

On motion ordered received and placed on file. 

No report from Committee on Local Agents, and on motion 
the committee were given more time. 

Mr. E. Brown, of Committee on Legislation and Taxation, 



prefaced his regular report with an acceptable apology for having 
to improvise a report the same day of the meeting, having inad- 
vertently left the original at his home in Alameda. 

ADDEESS. 

To the Fire Under writers' Association of the Pacific: 

Gentlemen — The duty of reporting on behalf of the Committee on Legis- 
lation and Taxation, in consequence of the manifold engagements of the 
chairman of the committee, and the absence of the second member, Mr. E. 
E. Potter, has devolved upon the undersigned. No business has been referred 
to the committee, and consequently no meeting has been held. In view of 
the usual enactments passed by the wise solons whom the people of the vari- 
ous States elect to be their law-makers, perhaps the most favorable statement 
the committee can make, is the negative one of "no business." As a rule, 
the State Senators and Representatives, being very rarely chosen from the 
business ranks of the community, bring to bear, on questions brought before 
them relating to insurance, a wonderfully dense and profound ignorance of 
the real intention and mission of insurance corporations, and too frequently 
look upon the capital and accumulations of such companies as their natural 
prey. This feeling finds its place in the minds of municipal administrators 
also, and soon the national Government has taken a hand in the game. 
Whenever it has become necessary to cast about for a source of revenue, 
nothing has been found more handy than the assets of insurance companies. 
Hence have arisen income taxes, taxes on gross income, on net income, 
licenses, dividends, and on capital and fees of every conceivable kind, stamp 
taxes, State, county and municipal, until frequently it has occurred that a 
company has been required to pay tens of thousands of dollars for the priv- 
ilege of doing business at a loss. 

The writer remembers the case of the Niagara of New York, which was 
taxed for one year, on its gross premium from the State of Pennsylvania, 
nearly $5,000, when, as a matter of fact, it had paid over $40,000 more for 
losses to the citizens of that State than it had received therefrom. Happily 
the legislators of California, wiser than their brethren of other States, or else 
not being possessed of equal financial ability, have not burdened the business 
of insurance with such onerous taxes. What they may in future endeavor to 
do, no man can foretell. In other respects the California Legislature has had 
before it and has passed certain bills relative to insurance, and ^popularly 
supposed to be for the good of the people of the State in which the member 
has shown a degree of enlightenment (or want of same) corresponding wi 
the legislators of other States, as the members of this Association are fully 
aware. Next winter the State law makers again convene, and it may be ne- 
cessary for us, individually or collectively, to use such influence as we may 
possess to guard the companies we represent from foolish or iniquitous 
schemes to harrass their business or tax their revenues — schemes which will, 



10 



without doubt meet the disapproval and enlist against them the services of 
every member of the Fire Underwriters' Association of the Pacific. 
Respectfully submitted. 

On motion, ordered received and placed on file. 

Mr. Geo. D. Dornin, Chairman of Committee on Fire Depart- 
ment and Water Supply, delivered the following address, which 
was listened to with great interest: 

A D D E E S S. 

Mr. President and Gentlemen: 

I should be very glad if I could present the subject allotted to me in a shape 
to be of practical use to you, but I am not yet advised what phase of the duty 
of an adjuster comes within the purview of the Standing Committee on Fire 
Department and Water Supply of this Association. 

The committee certainly has had no onerous duties to perform. That it is 
in your power, as adjusters and special agents, to make valuable suggestions 
to your principals, the results of your experience as such in the field cannot 
be gainsaid, and it may be in order, perhaps, if a few thoughts or reminis- 
cences of field work be strung together, and perhaps these may invite other 
suggestions from your later experience, and from these some practical good 
may come to those we represent. 

The great fires of late years have each developed the fact that cities out- 
grow the facilities for extinguishing fires with greater rapidity than the pub- 
lic, and especially the tax-paying portion, is willing to admit, and this condi- 
tion of affairs is only developed by extensive and costly fires. 

This is manifestly true of the three great fires with whose history we are 
most familiar. Chicago, which had the facilities of which it has since availed 
itself for being one of the best protected cities in the country, had for its sole 
dependence a solitary system of water works, reaching through tunnel and 
crib into Lake Michigan, with its pumping machinery situate in the north- 
east portion of the city, directly in the lee of the strong winds which blow 
across that city from the thickly built south-west portion, with its acres of 
lumber yards, factories, etc. Repeated warnings by smaller fires and the ad- 
vice of the thoughtful ones did not awake the people to a sense of their dan- 
ger, and the necessity of flanking a fire by a similar system of water supply 
in that section, until the great fire, commencing three miles away, and hurl- 
ing tongues of flame far in advance, speedily ignited and destroyed the water 
works, leaving Chicago, with its vast wealth, a helpless prey. 

The million and a half dollars since expended in Chicago would have been 
a small sum to pay for the comparative immunity she would have enjoyed on 
that fateful 9th of October. Chicago had outgrow T n its water system. 

Boston, the subsequent year, was another example, although to the horse 
distemper and other causes was attributed the inability of the firemen to pre- 



11 



veut the rapid spread of the fire at its incipiency, and it was not until the fol- 
lowing May that another heavy fire convinced the Boston people that the 
water mains and the fire regulations suited to the Boston of 100,000 people 
were not sufficient for a city of three times the number, with its modern 
buildings and warehouses six and seven stories in height. Boston promptly 
acted on the second costly hint, and an expenditure of two and a half millions, 
and ordinances which give the firemen the right of way through the streets, 
make Boston one of the best protected cities in the United States. 

To come nearer home. How often was the hint given to you, gentlemen, 
in your individual experience, that if a fire ever got fairly started among the 
cotton-lined, stove-pipe fringed houses in Virginia City, driven before a 
" Washoe Zephyr," that the two-inch mains along C street, and the cisterns 
therein, would be of no more avail than a garden hose in the hands of the 
firemen, be they ever so effective. 

How many of you reported the developments of the several preceding fires 
in '75, as to the condition of the water supply, and advised his principals to 
cancel? 

I have heard of some, wiser than their fellows, who did; but careful in- 
quiry leads me to think that in one case it was because of being euchered by 
his chosen appraiser on a building loss, and in another, a scare on the night 
of the explosion of dynamite in the Bank of California building. 

However that may be, the fact exists that, knowing the helpless condition 
of the city, we all continued to write more or less freely, until the destruction 
of seven (7) millions of dollars of property, of which the underwriters con- 
tributed two millions, revealed the full condition, and brought to recon- 
structed Virginia City the abundance of water that laid accessible, which only 
needed the facilities to bring a pressure of 500 feet to bear, before which the 
strongest building on the Comstock goes down, and which negatives the 
power of the famed zephyrs from Mount Davidson. 

To come still nearer home, have we not heard, time and again, in the board 
and out of it, in the press and in the streets, that the water supply of San 
Francisco was not sufficient; that the mains of our city, which were adequate 
for the San Francisco of ten years ago, are altogether disproportionate for 
the San Francisco of to-day, with its 300,000 people and multiplying frame 
buildings, three or four stories in height? 

How many of us have taken the hint which the fire on Brannan street gave 
us last summer on this subject, and have ceased writing south of Market 
street, pending action of the Spring Valley Water Co. (who have our desti- 
nies in their hands) in introducing new and larger mains in that quarter? 

We have all too much at stake to invite the costly experience of our sister 
cities, but it is among the possibilities that the half million fire of last sum- 
mer may be repeated by one ot five millions before " all the modern improve- 
ments" of water supply, first-class engiues, patent hose, etc., are given us. 

As special agents, surveyors, adjusters, or by whatever name we may be 
distinguished by our companies, we should consider it our duty to press these 
things in our reports, upon our principals, so that the responsibility may rest 



12 



upon them and not upon us, and we may then take whatever comfort we may 
by complacentty saying, when the fire-fiend rejoiceth over his work, " I told 
you so!" 

But, you tell me, the Board of Supervisors and the Board of Underwriters 
have their standing committees on fire department and water supply, and the 
Fire Patrol Association has all these things under advisement, and that his 
Honor the Mayor is an orficer in a prominent local insurance company and 
an active director of the Fire Patrol and has these subjects under his con- 
trol, we may, therefore, for the present, leave the matter of water supply 
and improved engines, so far as this city is concerned, to his Honor and the 
bodies just mentioned, and consider it " none of our funeral." 

The field of observation of the special agent and adjuster does not, as a 
rule, lie so much in this great city as in the other cities and towns on the 
coast, beyond the immediate observation of his principals; herein he must 
be the eye of the executive officer, his faithful lieutenant, and I hold that it 
it is of much more importance that he take note of the condition of the water 
supply and facilities for extinguishing fires, as affecting the desirability of 
risks and lines to be carried, than it is to make survey of the individual risk, 
or cultivate the good opinion of the local agent. 

An experience of fourteen years, having surveyed as Special nearly every 
town on the coast and adjusted losses in a majority of them, leads me to say, 
that the smaller towns, with each its one or two hand-engines, are not alto- 
gether unexceptionable places to write liberally in; and I am further pre- 
pared to say, and your experience will, I am sure, endorse it. that such towns 
are always the most clamorous for reduced rates because of such appliances. 
As a rule, I would prefer to write moderately in a town of a thousand or fif- 
teen hundred inhabitants supplied with its bucket companies, than in a simi- 
lar town with its hand-engine and hose-cart to depend upon. 

In the former case, every citizen is a fireman; his engine is always at hand, 
and the two score of buckets, well and promptly handled, are worth a torrent 
of water half an hour later. 

It was once my fortune to be stopping over night at Mokelumne Hill; this 
was some eight or nine years ago, and fires in Amador and Calaveras Counties 
had made the season pretty lively for the old iEtna and Phoenix companies, 
and had kept me dancing attendance on the towns in those counties. 

Many of you will remember Mokelumne Hill as one of the towns of early 
days, famous among those among us who traveled much as having the best 
hotel in the southern mines — the great stone building of George Leger; he 
keeps it yet, or rather one which was re-built for him after the fire of three 
years ago. Now, if there is anything the average special appreciates, it's a 
good hotel, especially in the mines, and we always arranged our trips so as to 
swing around and reach George Leger's and tie up. The livery man in that 
town has made a good many extra hundred dollars by special conveyances, to 
get the adjuster back to the clean beds, and bountiful French dinners and 
breakfasts, graced with a bottle of George's mountain claret, from his own 
vineyard. 



13 



Consider these parenthetical remarks as suggested by the pleasant reminis- 
cences which come to mind of those days, before much travel had become 
drudgery. 

On this night I was aroused by the cry of fire, and awoke to find the livery 
stable opposite in flames, and a frame range evidently doomed. 

The town had a first-class fire department, two large hand-engines, hooks 
and ladders, and a bountiful supply of water; the best men of the town were 
firemen, and the good people had unbounded confidence in their ability. Our 
agent there, good Dr. Hoerchner, was special patron of one of the compa- 
nies, and had the house of one of the engines, the old " Monumental " (Big 
Six, I think it was), large, handsome, and effective, adjoining him. 

Hastily donning my clothes, I ran to the Doctor's and volunteered my ser- 
vices to man the engine. As my strength was not equal to my zeal, I con- 
cluded that I could do better at the pipe than at the brake, so, seeing the suc- 
tion pipe in the well supplied cistern, I hastened to pick up the pipe and 
direct the coming stream at the fire, which was eating its way toward our po- 
sition. We waited impatiently; we could hear the shouts of the men and the 
clang of the brakes, but no water came, and the " Monumental " was out of 
service for that night. Subsequent investigation showed that through lack of 
use the pump valves had become dry and would not suck, and a $6,000 en- 
gine was of no use when most needed. 

On another occasion it became expedient, in my capacity as secretary, to 
send out a circular-letter to our agents, in view of the approaching Fourth of 
July, cautioning them to see that every appliance for extinguishing fires was 
in order. One of these circulars came into the hands of an agent in a pleas- 
ant town of some four or five thousand people, much cultivated by insurance 
men, which depended upon its one engine for protection. The agent, one of 
the town trustees, secured the passage of a resolution instructing the engine 
company to test this apparatus before the Fourth. This was done, and in the 
trial two or three sections of their small supply of hose proved rotten, and 
bursted. A new supply was immediately obtained; the Fourth passed without 
a fire, but a few weeks after, a fire broke out which required the best efforts 
of firemen and citizens to prevent sweeping the town. 

These incidents, and they might be multiplied in your own experience, are 
brought out to show that little reliance can be placed upon the usual machin- 
ery for suppressing fires in the average country town, and this arises prima- 
rily from lack of use to keep the machinery in order and the firemen in prac- 
tice. 

And this brings me to the moral to be adduced: That for towns of 5,000 
inhabitants or less, one or more "bucket companies," with forty or fifty rub- 
ber buckets each, equipped with light ladders and hooks, and casks of water 
at convenient places, are of vastly more value at the incipiency of a fire than 
the more costly and cumbersome engines. Not that I would ignore the lat- 
ter, but that they should be considered auxiliary to and supports of the bucket 
companies. 

The solitary engine is most frequently an evil, because of the disposition 



14 



of the people at an alarm of fire to await its arrival, instead of springing at 
once, bucket in hand, to the point of danger. 

A zealous man in Boston, Mr. Joseph Bird, recogniziuf tho value of the 
precious moments at the incipiency of fires, which are in manv instances lost 
while awaiting the arrival of the engine, has been urging the more general 
adoption of a small engine, more like an ordinary portable garden pump, for 
use at the outbreak, and supports his views as to their value by well fortified 
statistics. 

I am in sympathy with his views, and I would write more freely for my 
company in the towns supplied with the Bird pump or its equivalent, and a 
bucket brigade, than I do where the sole dependence is placed upon the usual 
hand engine or occasionally used steamer. 

This subject has led me along to a length not anticipated; it expands as we 
consider it. 

The relative value of the Holly and other systems; of hand and steam 
power; of paid and volunteer systems, are all within the compass of the sub- 
ject, and I do not doubt have been considered by each of you, and have prob- 
ably been embraced in your reports to your companies. 

I have not attempted to introduce statistical matter, or even arrr-ige into 
groupings the various towns, and the character of the protection tneir re- 
spective facilities offer. 

All these and the number of fires and relative loss therein, the efficiency or 
inefficiency of the fire departments and citizens, are essential to a proper un- 
derstanding of the business of fire underwriting, and may properly come up 
for discussion at some future meeting. 

I have aimed to show : 

First — That, whether in small town or larger city, promptness in respond 
ing to the alarm is all-essential, and whatever means will soonest bring the 
extinguisher to bear, be it water, steam, or carbonic acid gas, is the most 
effective; and 

Second — That the greatest danger to oar companies comes from the neglect 
to recognize the rapid growth of our cities and towns, and that this growth 
impairs the efficiency of the water supply, and, to some extent, of tb 
department. [Great applause.] 

On motion, Mr. Dornin's report was ordered received and 
placed on file. 

Mr. Brown moved that the members take to mind its valuable 
suggestions. 

Geo. W. Spencer, Chairman of the Committee on Statistics, 
presented the following report, which was read by the Secre- 
tary: 



15 



REPORT OF COMMITTEE ON STATISTICS. 

To the Fire Underwriters' Association of the Pacific : 

Gentlemen — \6ur Committee on Statistics beg leave to report that in view 
of the fact that but a small portion of the companies doing business on this 
coast are home companies, the matter of " statistics " must necessarily be 
meagre and unsatisfactory. But three of our local companies keep a full 
classification of their business the larger number of Eastern and foreign 
agencies having their Pacific Coast business classified together with their 
losses at the home offices: consequently your committee are unable to make 
such a report as they would deem of interest to the Association. 

Moreover, the Fire Underwriters' Association of the Pacific being an inde- 
pendent body, having no connection, as a whole, with the various companies 
represented here, your committee do not feel authorized to solicit from many 
of said companies such information, in the matter of " statistics," as would, 
perhaps, be cheerfully given if these companies were more directly interested 
in its actions and reports. 

Looking at the matter in this light, your committee can simply suggest that 
the Association take some .steps looking toward a more perfect union of inter- 
ests between the companies represented on this Coast and themselves, when, 
no doubt, a greater amount of facts and figures bearing on "statistics " can 
be obtained, than under our present system. 
Respectfully, 
[Signed] GEO. W. SPENCER, 

JAS. D. BAILEY, 
H. W. SNOW, 

Committee. 

On motion, was ordered received and placed on file. 

Treasurer made his report, which shows a balance in bank to 
credit of the Association of $143.35. On motion, it was ordered 
received and placed on file. 

"*!. Bromwell moved that the Secretary place a voucher for 
t\* „ity-five ($25) dollars for services the past year, in the hands 
of the Treasurer. So ordered. 

No reports from the President and Secretary; and, on motion, 
they were given more time. 

Applications for membership received from Dave Rorick and 
C. P. Ferry. Under suspension of the rules they were declared 
duly elected. 

Mr. Barnes was appointed a committee of one, to wait upon 
Mr. Ferry, who had stepped out of the room, and advise him of 
his election. 



16 



Capt. E. E. Ryan, of Chicago, was, under a suspension of the 
rules, elected an honorary member of the Association, where- 
upon that gentleman acknowledged the compliment in a neat 
little speech, full of good wishes for the Association, the Pacific 
Coast, and resident underwriters generally. 

Under suspension of the rules, the following officers were 
elected by acclamation for the ensuing year: 

George D. Dornin President. 

W. L. Chalmers Vice-President. 

J. W. Staples Secretary and Treasurer. 

Executive Committee: 
E. Brown, W. J. Landers, A. D. Smith. 

Mr. Gunnison invited the President elect to take the chair, 
which he did, and announced his desire to defer the appointment 
of the various standing committees until the next meeting. 

Mr. Brown, Chairman of Eire Department and Water Supply 
of the Board of Underwriters, suggests that members of this 
Association communicate all points of interest that may come 
under their observation, to the Association at its regular meet- 
ings. 

On motion, adjourned. 



The first annual meeting was held on the 20th of February, 
1877. At this meeting the Committee on Local Agents, and the 
Secretary, were given more time to make a report, and at the 
regular monthly meeting, held March 20th, 1877, Mr. Gunnison, 
of the committee, submitted a report, which was read from the 
Secretary's desk, and is as follows: 

BE POET. 

This Committee, of which the writer is a very humble minority, has done 
nothing officially during the past year; has not held a meeting or been called 
upon to take action upon any case under its jurisdiction. The writer was the 
only representative present at the annual meeting, and there made a too hasty 
promise to present a report at this meeting; a hasty promise, repented of at 
leisure. 



17 

I have seen Gen'l Magill, the Chairman, but once since, and but for a 
moment, told him of the promise and urged him to get up a report worthy of 
the name. I hope and trust you will receive a report from his able pen; in 
which case the Secretary will please consider this as naught and retire it to 
the waste basket. It is written while suffering severely with indisposition, and 
when about to start on a trip, that will prevent, I am sorry to say, my being 
present at what, I believe, will be a very interesting and useful meeting. 

The appointing of local agents throughout the Pacific Coast has gone 
through a wonderful change during the last ten years. Only ten years ago 
there were so few fire insurance companies on this Coast that it was a matter 
of but little difficulty to find a fair or good man to act as agent for each com- 
pany in any town of ordinary size. But the steady influx of Eastern and 
Foreign companies has so used up the insurance material, so to speak, that 
now, to be successful in appointing locals in even the larger towns, without 
combining several companies in one agency, requires more than ordinary 
tact, experience and acumen. 

The success and standing of any company depends a great deal on the char- 
acter and good judgment of its local agents. As " a man is known by the com- 
pany he keeps, " so a company is known by the men it keeps (as agents). There 
are but few men in any interior town that possess in a high degree the requi- 
sites for good, reliable agents, and in some towns it is difficult to fiud any. 
Therefore, it is not strange that when you have to " try them on, to know 
how they will fit," you will occasionally find locals that prove incapable, and 
sometimes dishonest. But it is far better to have a good man prove incapa- 
ble of getting a large business, than to find a smart, active, successful solici- 
tpr .of business turn out at last to be a defaulter. Perhaps there is no busi- 
ness in which men oftener mistake their calling or their abilities than in act- 
ing as local agents for fire insurance companies. 

Men who fail in everything else do not make good insurance agents, though 
too often tempted to try it as a last resort; neither do men who are really 
successful in their own business, and who accept the agency by the " forcing 
process," adopted by too zealous " specials," who dislike to report to their 
home office their failure to appoint an agent. 

Better do a small business, with a good, willing agent, or even no business 
at all, in some towns, than risk the agency in bad hands! Men are said to 
be honest for the want of any opportunity to steal. Too often the smart, 
smooth-tongued and confident young man runs away with the collections, be- 
tween two days, and this brings up a question upon which experts differ. If 
" A " places his surplus business with " B," and " A's " agent decamps with 
the funds, is "A" holden to "B" for the latter's proportion of the premiums? 
A case in point has just been tried before Judge Wheeler. The testimony of 
experts largely preponderated in favor of the fact that " A " was, in law and 
custom held, but that "courtesy" between the companies oftentimes led 
<' B " to pocket the loss -with a grimace. The Judge decided in favor of law 
and custom, and left " courtesy " to take care of itself. 

This point might be easily settled by the underwriters agreeing upon some 
2 



18 

definite course to pursue in such cases, deciding whether or not "B " takes 
the risk of " A's " agent's honesty, along with the other risk. 

I have the authority of our worthy Secretary, that " local agents " include 
city brokers and solicitors of insurance. 

At the risk of lengthening this report to an unpardonable extent, a few 
words on this point may not come amiss. It should be the honest effort of 
every underwriter to secure good business at fair, paying rates, and consider 
a large business, secured at the expense of fair rates, as undesirable, and not 
good underwriting. The former can be secured under a healthy and business- 
like competition in the field of practical underwriting, and the honest, capa- 
ble and experienced broker or solicitor is a useful and profitable adjunct 
thereto. But the custom now so prevalent, of paying brokerage to everyone 
who will bring grist to mill, without regard to the character or responsibility 
of the solicitor, is inducing many to enter into the business of soliciting fire 
insurance who are unfit for any business whatever — untrustworthy and really 
dishonest. It is not the fact alone that the process of beating down rates, a 
process that " cuts both ways at once," so well known to you all, but it is the 
fact that the respectability of the business of underwriting is greatly lowered 
in the business community thereby. Careful underwriters are thus forced to 
give up good business to those who think more of an array of big figures at 
the end of the year, than of safety to themselves and perfect indemnity to 
their customers . 

Under this head, also, the question of dishonesty of agents comes up, if 
they are agents of the underwriters at all, is doubtful. We number among 
our insurance brokers and solicitors in this city many men of proved integrity 
and trustworthiness; but in a business requiring no capital to start, many 
can be found who eventually prove dishonest. 

There should be a rule adopted among underwriters, by which one should 
be required to report to all the others the names of defaulting solicitors, and 
a rule requiring the others to cease all business intercourse with the defaulter. 

This would soon weed out a large number, and we might safely leave the 
balance of the work to the Board of Insurance Brokers, if there is such a 
board. There is no reason why the brokers and solicitors of fire insurance 
should not be a healthful and useful body of business men. In this connec- 
tion, it might be possible that some course adopted by the underwriters in 
their conduct toward the insured, whom the irresponsible solicitor has cheated 
out of his premiums, would work a salutary effect in preventing a too hasty 
and careless payment of premiums, without a receipt from the proper source. 
A case in point has just been decided on appeal in the New York courts, 
where the insurance company sued the assured for premium paid to the bro- 
ker, and recovered judgment for premium and costs. 

The N. Y. Insurance Monitor says of this matter: "Thus the question ap- 
pears to be now fully settled — property-owners must see to it that the premium 
is actually paid to the company, under the penalty of being compelled to pay a 
second time, if the broker pockets the money paid him." 

Kespectfully submitted, A. R. GUNNISON. 



19 



REPORT OF THE SECRETARY. 

Mr. President and Gentlemen of the Fire Underwriters\Association of the Pa- 
cific — At the last meeting the Secretary was called upon for a report; in ac- 
cordance with that request, the Secretary begs leave to submit the following: 

In reviewing the work of the year just passed, we find that the Associa- 
tion has steadily progressed in interest as well as in membership, this 
being, as it were, a school for the younger member, and a sort of lit- 
erary club for the older ones, where they can give the benefit of their 
experience, and discuss those subjects which long and patient training 
has made familiar to them and valuable to their principals. It can, there- 
fore, be no ordinary association to which we belong, but one that calls for the 
fellowship of the entire fraternity, and is too valuable to be allowed to lag for 
•want of proper effort. Thus, I think, if each member would represent to the 
underwriting fraternity of the Pacific Coast the object of the Association and 
its general features, we should add largely to our number, and stimulate the 
present membership to renewed efforts in the way of progress. 

The Association can show an increase in its membership during the past 
year of twenty-one; thus, with our original twenty-eight, our total member- 
ship is forty-nine, an increase of (75) seventy-five per cent. 

The Secretary desires to call the attention of the members to the fact that 
at the meeting held March 21st, 1876, a committee, consisting of Messrs. 
Geo. W. Spencer, R. H. Magill, and B. C. Dick, was appointed to form a nu- 
cleus for a library for the Association. The committee have never made a 
report showing progress. 

In regard to this committee, the revised by-laws provide for a " Standing 
Committee on Library," and it is to be hoped that so important a work will 
be faithfully attended to, and not allowed to become a nonentity; and allow 
me to suggest that steps be taken to provide a suitable book-case to hold the 
books that we now have, and that the committee suggest a list of text books which 
would be desirable to add to the library, and thus make a fair start. I think 
that the Association would even be willing to receive donations in that line. 

There was also at the meeting held Nov. 21st, 1876, a resolution adopted, 
" that the chairman appoint at each meeting three members of the Associa- 
tion, one of whom shall present an adjustment for discussion at the meeting 
following the appointment ." The Chair appointed as such committee, Messrs. 
H. H. Bigelow, R. H. Magill and W. J. Landers, and no report has been 
received from this committee, nor has any subsequent committee been ap- 
pointed. 

This is too valuable a work to be consigned to oblivion, and if the commit- 
tee so elect, they can conduce very materially toward building up the Associ- 
ation and vesting it with new interest. This is, in fact, the keystone to our 
arch, when we consider the object of the Association — i. e., mutual improve- 
ment — for what can be more instructive and improving than for us younger 
members to listen to our elder brethren, as they discuss so familiar a topic as 
a "loss adjustment?" 



20 



Then, by all means, let us have a committee appointed, or the old one re- 
appointed, and then we can listen to many a reminiscence and story of the 
days of " lang syne/' and the untangling of many knotty complications in 
non-concurrent policies. 

While on this subject I would like to offer a suggestion for your considera- 
tion, to-wit: That the committee be reduced to one member — this will not 
use up our choice ones so rapidly — and that the member be instructed to hand 
to the Secretary a written theme before the next meeting, which, in the ab, 
sence of the member, will be read from the Secretary's desk. However- 
should the member be present, the theme will be returned to him and he can 
make his report in person. The object is, that the subject for discussion will 
be presented to the Association even though the committee should be absent. 

These things, gentlemen, are offered for your consideration, and if the sug- 
gestions are accepted and carried into effect I feel confident they will do much 
to bring the Association into prominence and repute, and will tend to produce 
fuller attendance and greater interest in our meetings. 
Kespectfully submitted. 

J. W. STAPLES, 

Secretary. 



PROCEEDINGS 



OF THE 



SECOND ANNUAL MEETING 



OF THE 



FIRE UNDERWRITERS' ASSOCIATION 

OF THE PACIFIC. 



The Second Annual Meeting of the Fire Underwriters' As- 
sociation of the Pacific was held in their room, 418 California 
Street, on Tuesday, February 19, 1878. 

Geo. D. Dornin, Esq., President, in the chair. After the pre- 
liminary features, such as roll call and reading of the minutes of 
the previous meeting, the following business was transacted : 

The report of the Treasurer was read, which showed a balance 
in bank of $62.40. On motion, the report was ordered received, 
and placed on file. 

On the call for the report of the Committee on Local Agents, 
the Secretary stated that the Chairman of the Committee, Henry 
Smith, was lying sick unto death, and the other members could 
not get time to make report. No further action was taken. 

Then the report of the Committee on Forms of Policies was 
called for. Mr. H. H. Bigelow, of Committee, asked for more 
time, saying he would have a report at the next meeting. On 
motion, the Committee were granted more time. 

Mr. Geo. W. Spencer, Chairman of the Committee on Losses 
and Adjustments, read the following excellent paper: 

Gentlemen -There have been many papers upon this most important sub- 
ject, written by the ablest minds of the insurance profession. Men, so full 
of wisdom that we are proud to sit at their feet and receive their teachings in 
the great school of underwriting, have given us, in the most exhaustive essays, 
the benefit of their vast experience and years of thorough conscientious study. 
It is, therefore, with diffidence, born of our sense of inability to do justice to 



22 



the theme, or add aught of special interest to the proceedings of this, our 
second annual meeting, that we occupy your time in making these few re- 
marks, as your Committee on Losses and Adjustments. 

From the destruction of property by fire and sea; the sweeping away in 
an hour's time the slow accumulation of years; in short, from losses, has 
sprung the entire fabric and superstructure of insurance. This most perfect 
system of indemnity, so widespread and universal, that it confers its bless- 
ings upon the entire commercial and business world, with its immense invest- 
ment of capital and aggregation of assets, its net- work of agencies drawing 
resources from every land, and its army of veteran officers and "war-worn 
specials," originated from, has been reared, as it were, stone by stone, upon 
the most costly of all foundations — losses. 

Insurance hinges upon losses; our business is a study of them, and what a 
life-long study it is. Take losses by fire alone and their origin; how to guard 
against and prevent them; what lines to carry — our judgment of to-day prov- 
ing at fault through the experience of to-morrow; how shall we construct our 
buildings to render them " fire-proof;" what legislation can we effect that will 
reach that fiend incarnate, the incendiary — are a few of the many questions 
that are presented in rapid succession for our consideration. Again, how in- 
testing to study the effect that losses have upon our different members. Con- 
trast the calmness with which one opens the ominous telegram with the ner- 
vousness of another, or the magnificent generalship displayed by some, and 
we have a notable example in the President of this Association, in winning a 
victory, when harassed on every side and with overwhelming defeat staring 
them in the face, with the incompetency, mismanagement, and cowardice of 
others in wrecking their companies upon the first occasion that disaster over- 
takes them. 

We are too much given to view losses with alarm; they are not altogether 
an evil, for they certainly tend to make us most unselfish. We are ever ready 
to share them with others, and an underwriter's affliction is usually mitigated 
on learning that his neighbor has not been neglected. But, in all serious- 
ness, it is better that we should have our fair proportion of losses. Without 
them we are apt to grow careless and throw down those safeguards and bar- 
riers that judgment and experience teach us should be maintained. Rates 
are reduced, lines increased, special hazards accepted and irregularities per- 
mitted without question. We drift smoothly along into the breakers and 
awaken too late from our dream of prosperity to meet the train of losses so 
sure to follow. 

In accepting premiums, we must be prepared to return their fair equivalent 
in the payment of losses. No business can long be conducted on the princi- 
ple of total receipts and no expenditures, and insurance is no exception to 
the rule. 

But space is not permitted us to dwell at further length upon this subject, 
unless we encroach upon the time of others, whose remarks will afford you 
greater interest, and we, therefore, hasten to a conclusion in considering the 
most important question connected with losses — their adjustment. 

This organization is one of the results of the Virginia fire. It was formed 



23 



by the adjusters, who met on that occasion and found that, at such a time, 
concerted action was necessary. It now embraces in its membership most of 
the specials and adjusters and many of the agents and officers of companies 
represented in this city. 

That it has been of advantage to us I think no one will qnestion; it has 
brought us together and we have exchanged opinions and experiences; it has 
tended to do away with "sharp adjustments," where salvage is made at the 
expense of justice; it has established a higher standard in our dealings with 
each other, and unfair advantages taken of a brother adjuster, are no longer 
the boast of, but bring disgrace upon the one who attempts them. 

If for these reasons only, and had no other results been accomplished, we 
should feel that the Association has not been a failure. Let us devote more 
time to this work, put new life and energy into it, and make it the success it 
should be, and it will do each member of us some good. 

In the adjustment of losses our experiences are numerous, and at times 
most interesting. The life of an adjuster is a varied one. He meets " many 
men of many minds," is called upon to act with promptness and decision in 
cases without precedent to guide him, and to decide impartially on the merits 
of a claim between the claimant and his company. And what a variety of 
claimants there are! We have read descriptions of some most familiar exam- 
ples lately, so truthful in details that we at once recognize them as old 
friends. 

The suspicious man who watches every movement of the adjuster, and is 
fearful of committing himself; the excitable claimant who is insulted at the 
simplest inquiry into the value of his property destroyed; the distressed ap- 
plicant, with tears in his eyes, presenting his little bill in supplicating tone of 
voice; the honest man, who "pledges you his word and honor" so freely, 
have each and all been so clearly depicted that there remains little, if any- 
thing, that we can add to render their likenesses perfect. 

We trust that this Association may increase in strength and grow in impor- f 
tance, and that its members may be characterized for fair dealings and honest 
adjustments wherever they may be called upon to act. 

On motion, the report was ordered received and placed on 
file. 

Mr. W. J. Landers, Chairman of Committee on " Forms of 
Policies," came in during the reading of the foregoing report, 
and on its completion read his report, as follows: 

Gentlemen — As a Committee, we are led to assume that the Association 
expects a report embracing comments and suggestions in connection with the 
" Forms of Policies " in use on this coast, rather than the proceedings of the 
Committee for the year, the latter already forming a part of the minutes of 
the various monthly meetings of the Association. 

The ordinary policy of insurance, though justly regarded as a contract, 
presents features not often found in connection with other contracts. Most 
contracts are in writing, or if partly printed, the printed portion is small, and 



24 



applies strictly where the form is used. Not so with the insurance policy; it 
is nearly all in print, and embraces many conditions, all of which cannot be 
said to apply to every insurance. For instance, reference to man ufacturing 
establishments running short or overtime, has no apparent connection with 
an insurance on a dwelling or its contents. Again, reference to ^oods on com- 
mission and held on storage, has no direct relation to an insurance on a build- 
ing. We could cite many other instances where conditions apply to one sub- 
ject and not to another. But those mentioned are sufficient to draw the at- 
tention of all to the well-known fact that, with few exceptions, but one form 
of policy is in use. In this may be found one reason why most persons do 
not read their policies. A mortgage or other contract will be read word for 
word, but the insurance policy will only receive such attention when circum- 
stances render it absolutely necessary, and even then the assistance of a law- 
yer is often sought for the purpose of segregating and applying the con- 
ditions. 

One of the Associate Justices of the Supreme Court of the United States 
said a few years since that he could not be fully protected under the usual 
printed form of policy. A prominent citizen, whom we could easily name, 
insures the contents of his house by a schedule, amended every year and made 
a part of the policy. 

Another gentleman, who for several years was connected with the agency 
of a prominent Eastern company, confessed that he never read the whole of 
any insurance policy in his life, in order that he could avoid explaining the 
printed conditions to his friends. 

In addition to this, as underwriters, we are sometimes asked whether a pol- 
icy on a retail variety or fancy store covers such articles as engravings, printed 
books, music, etc., when the same is required to be particularly specified un- 
der the printed condition and supposed to be covered under the word mer- 
chandise, in the written portion. Many underwriters presume that the printed 
clause mentioning the above applies only to dwelling-house contents, but the 
policy does not warrant this, and goes even further, when it states distinctly 
that " the use of general terms, or anything less than a distinct, specific 
agreement, clearly expressed and indorsed on this policy, shall not be con- 
strued as a waiver of any printed or written condition or restriction therein." 

Two conclusions can here be drawn — 

1st. It would be desirable to use more than one form of policy, each to 
embrace only the conditions pertinent to the class of property insured; and — 

2d. That the written portion should include, word for word, any articles 
desired to be covered, and which are excepted in any printed condition of 
the policy. 

On motion, ordered received and placed on file. 

No report was received from Committee on cc Legislation and 
Taxation." 

Mr. E. Brown, Chairman of Committee on iC Fire Department 
and Water Supply," then read the following interesting report: 



25 



Gentlemen — Your Committee approaches the subject upon which it is its 
duty to discourse with exceeding diffidence. The able, learned, and thor- 
oughly exhaustive manner in which it was treated by last year's Committee, 
leaves but little to be said. 

It is stated that about the most unpleasant situation conceivable is to be- 
come the immediate successor of one of the world's great men, in a position 
which he has but lately vacated. Fancy the " true inwardness " of the feel- 
ings of the man who, elected to fill the vacancy in our National Congress, 
created by the death of a Webster, a Clay or a Stevens, when he makes his 
fiist appearance in the seat of the illustrious departed, his consciousness of 
the unfavorable comparisons which must be drawn between him and his great 
predecessor, his after reluctance to speak on any subject, because he well 
knows that he can never hope to rival the brilliant efforts which have en- 
thralled the senses and minds of all listeners. 

Some such feelings have we at this moment, and so little can we hope to 
say anything which will add to the information which we received last year, 
or the pleasure with which we listened to the admirable description of by- 
gone experiences of Mokelumne Hill, and the Big 6 of the Ledger Hotel, and 
the Bucket Brigade, that we shall merely confine ourselves to a few thoughts 
upon the Fire Department and Water Supply, in which we are most inter- 
ested — namely, that of San Francisco. 

It has probably happened to most of you, as to the writer, who have visited 
various towns upon supervisorial duties, to have found that the M best Fire 
Department, for- its size, in the United States," is confined to no particular 
locality. It meets one at every turn and crops out in every city, town and 
hamlet, from the Androscoggin to the Golden Gate Chicago, foremost in 
boasting as in many other things, long claimed to have the best Fire Depart- 
ment, par excellence, of the world. How rudely this fallacious dream was dis- 
pelled in '71 we all know ! 

Modest Boston, scrupulous in all its utterances and pretensions, at one 
time, prior to 1872, it may be interjected, imagined that its apparatus and 
service were as near perfection as anything in this mundane sphere ever at- 
tains to. We have no doubt, though here we speak without authority, that 
Portland, Oshkosh, and even Petroleum City had fully as high an opinion of 
their respective establishments. 

With such illustrious examples, is it to be wondered at that most San Fran- 
ciscans, including, we have a suspicion, not a few of our local underwriters, 
cherish the fond hope that in their gallant firemen and finely-equipped De- 
partment may be found a perpetual bulwark against the worst efforts of the 
"Fire Fiend." 

Without wishing to utter one word of detraction against our fire laddies, as 
brave and hard-working a set as ever lived, or against the experienced skill 
with which they are directed by our worthy Chief Engineer and his assist- 
ants; still we cannot avoid a serious foreboding that when the time of severe 
trial comes — may it long be averted!— our Fire Department, notwithstanding 
all its skill, energy and gallantry, will be found incompetent to control the 
situation. 



26 



Gentlemen, we are as completely isolated here as is the burning vessel 
1,000 miles from land, with no friendly craft within viewing distance of its 
flames. New York, Philadelphia, and other large cities can summon 100 
well-equipped and manned engine companies to their assistance, and these, 
within one or two hours, will be fighting side by side with their own firemen. 
We can have no such friendly support, but must rely entirely upon our own 
department. 

Let us reflect for a moment upon the inadequate means at its disposal. 
Eleven engine companies, with only four permanent, men to each company; 
three reserve engines — only fourteen in all — to be manned by volunteers or 
extras. New York, with an area but a trifle larger than that of San Fran- 
cisco, and built almost entirely of brick, has nearly fifty engines, most of them 
first-class (we have but one), besides numerous chemical and steam-floating 
engines. Their men are all permanently employed, and splendidly dis- 
ciplined. Philadelphia has even more engines than New York, and there are 
but few Eastern cities of from 50,000 to 100,000 inhabitants, which have not 
departments equal in material and numbers to that of San Francisco. 

But there is still a more ominous feature to be considered. Our water- 
pipes, except in one or two favored localities, are utterly inadequate to sup- 
ply even the few engines we possess. In marty portions of the business dis- 
tricts the five or six-inch pipes will furnish water for three or four steamers 
only, even at full pressure. One can easily picture the effect upon this lim- 
ited supply by the burning of one or two blocks when the one thousand and 
one service-pipes introduced into every floor and office room will be running 
their contents uselessly to waste and thereby reducing the pressure in an 
enormous degree. The fire of August, 1876, on Brannan street, is a sufficient 
example of our helplessness in this particular. 

The Spring Valley Water Company, either reckless of possibilities or de- 
terred by the recent agitation on the water question, have made no effort of 
late to introduce larger mains or branches. 

About one year ago, when one of your Committee was a member of a simi- 
lar committee of the Board of Underwriters, the Engineer of the Water Com- 
pany promised him that at an early date he would lay a 16-inch pipe from the 
Market-street main along Seventh street to Brannan street; thence along 
Brannan and other streets to First or Second street, and up one of said streets 
back to Market street, to be so connected with existing pipes on intersecting 
streets as to be available in any part of the southern portion of the city. No 
steps have as yet been taken to carry out this admirable plan, and the south 
side is to-day practically defenseless. 

In other respects we are behind sister cities. Our hydrants, old-fashioned 
and comparatively of little service with their 4-inch rectangular connections 
and 2%-inch openings, should be replaced with new ones, having curved 
6-inch connections and openings at least 3% inches in diameter. More per- 
manent men, including the foremen, should be employed on each engine com- 
pany, and none of these allowed to hold any other position. At least four 
large chemical engines, such as are in use in New York and Boston, should 
be purchased and located in different sections of the city. These would be 



27 



invaluable for immediate service and for use in the hilly and other portions 
of the town, which are either inaccessible to our steam engines, or so precipi- 
tous, so illy paved, or so remote, as to be practically beyond their protection. 
Your Committee feel that the underwriters are lax in their duty in not using 
every means to bring before the Water Company, the city authorities, the 
State Legislature and the people themselves, the perilous necessity for their 
immediate protection by having larger water-pipes and an adequate force at 
the disposal of the Chief Engineer. 

Not only should they make public notice of this, but also they should not 
cease in their efforts until these and other desired reforms be instituted — this 
they owe to their employers, the companies whose capital and assets are en- 
dangered, and to their fellow-citizens who look to them for protection, by 
both of whom they will certainly be blamed when the catastrophe has come 
upon them, for their laxity and negligence. 

We are happy in believing that the large majority of our interior towns are 
far better provided in comparison to their necessities, with apparatus, water 
supply, main and distributing pipes; indeed, we think that the towns of the 
Pacific States will compare very favorably in these respects with the far older 
towns of equal size in the Atlantic, Southern or Western States, and we trust 
the day is very near at hand when we shall be able to speak as hopefully of 
this rapidly growing metropolis of the Pacific Coast. 

By vigorous and united efforts, we, the underwriters, vitally interested, can 
do much to hasten that date- 
On completion, it was received with applause, and, on motion, 
was ordered received and placed on file, and also a copy ordered 
sent to the editor of the Bulletin for publication. 

Committee on " Statistics" made no report. 

Mr. J. W. Hart, Chairman of Committee on "Library," read 
the following witty report: 

Gentlemen — The work of your Committee of Library, during the past year, \ 
does not call for a lengthy report, and therefore, like the quality of mercy, 
"is twice blessed." It presents, however, an essential feature, without 
which a report on Library, even from a flowing pen, would be as great a 
solecism as the play of Hamlet without Hamlet. We have got the Library. 

The Treasurer's report reminds you that, from the funds in his hands, a 
grant of $200 was made to your Committee by vote of the Association under 
specific instructions. Those instructions we have tried to carry out to the 
best of our ability; anyhow, we have spent the greater part of the money, and 
we have now the pleasure and the satisfaction of presenting to you the first 
fruits of our work in a collection of text-books and professional miscellany, 
which, though of modest size, and by no means so complete as we hope yet 
to see it, is nevertheless entitled to be called a library ! It is a vested interest, 
has a black walnut bureau of native make, value $50, a lock, a key and a cat- 
alogue, and take it all in all, as it now stands before you, it is a pledge and 



28 



practical proof that our Association means business and does not intend to 
die of inaction. No one who enjoys the privilege of intimate intercourse with 
the members of the underwriting fraternity of the Pacific Coast, can say that, 
as a body, they lack the elements of good fellowship in a fair share of viva- 
city and " chic." Indeed, they dearly love a joke, even at the expense of a 
neighbor, aud their relentless fights for " biz " are carried on with a degree 
of ready humor and of wit both bright and keen, if somewhat cutting, that do 
not belong to dull boys; while for genial flow of soul and hearty merriment 
there are few symposia so racy and exhilarating as a spontaneous gathering 
of representatives, after a hard day's tough adjustment at the scene of some 
remote big fire. The evenings at Virginia City during October of 1875, at 
one of which the happy thought of a permanent association had birth, will 
gild the memories of the participants as veritable nodes ambrosiance. Let no 
one fancy, however, that the profession is all beer and skittles, or that the ob- 
ject of our meetings here is to dissipate idle hours, in high or low jinks! A 
glance at the contents of our Library will effectually dispel such idea. No 
light literature burdens our shelves, and it would require a hopelessly aban- 
doned mind to torture amusement out of such specimens as " May on Insur- 
ance," " Sansum's Digest," "Municipal Reports," or even " Griswold's Fire 
Underwriters' Text-Book." It is not from such distillations, or from such 
taps that the light-minded usually seek intoxication, although the indispensa- 
ble and ably conducted Coast Review doubtless contains not a few curiosities of 
literature which might tempt the profane to trifle, and "Bennett's Cases" 
may possibly suggest to perversely ingenious imaginations grim subjects of 
humorous comment. Try them! 

It is unnecessary for us to detain such a meeting as this by dilating upon 
the value of a library of reference. The veterans and Nestors of the profes- 
sion will be the last to underrate it, while to those who are beginning their 
experience and have their spurs to win, the advantage of access to well- 
selected standard text-books and special legal authorities is too self-evident to 
require pressing. There is one little luxury, however, connected with such 
advantage, which has to be tasted to be thoroughly appreciated. When one 
of those able and ingenious fellows — pragmatic, or twist-'em-round — evolves 
finely-spun sophistries from his inner consciousness, it is delightful to be 
able to point to a text or standard authority, and say, " All very well, my 
friend, but thus it is written, or thus saith the law ! " 

We do not wish to cackle too pretentiously over our little nest-egg, but in 
presenting to you our modest Library, we would simply express the hope that 
its unquestioned advantage will be used, and that, with the appreciation that 
comes of use you will soon " ask for more." 

We have only further to add that a complete catalogue is at the service of 
the members, and we would respectfully draw special attention to the order 
of the 15th of May, 1877, engrossed thereon. It is possible that, by timely 
reference to the books on our shelves, the only condition allowed for removal 
of those books, " use in Court," may be avoided in nine cases out of ten, and 
much needless expense saved to companies as well as time-consuming worry 
to agents. 



29 



The volumes of the Coast Review and other journals have now been bound, 
and subscriptions continued, for which, in due time, the necessar3 T votes will 
be asked. Donations of suitable works or pamphlets will be thankfully re- 
ceived, and the Committee will be grateful for any suggestions from members 
for additions to the regular collection, under approval of the Association. 

The report was received with great applause, which so upset 
our modest friend that he asked to be excused to keep an en- 
gagement. 

On motion, the report was ordered received and placed on 
file. 

Mr. A. P. Flint moved that the Executive Committee be au- 
thorized to put into proper shape the proceedings of the Associ- 
ation for this and last year, for distribution among the mem- 
bers. Carried. 

Mr. Geo. D. Dornin then read a very able address, as follows: 

Gentlemen — The duty which, by our rules, devolves upon me, as the re- 
tiring President, to review the proceedings of the past year, imposes no oner- 
ous duty. 

It has been a year marked by no great disaster to our special interest on 
this coast, and in consequence no extraordinary demand has been made upon 
the fraternity of adjusters to settle vexed problems in adjustments. By this 
I do not mean it to be understood that, as a fraternity, the adjusters have 
been idling in their offices, for the statistics show that the fire losses in the 
single State of California amount to $1,224,754 against $3,500,000 received in 
premiums, or 34 per cent, of the premium receipts. The predictions made 
last spring that the "dry winter" of 1876-77 would largely increase the moral 
hazard during the following summer, does not appear to have been justified 
by the above showing, comparing it with the record of the past seven (7) 
years, which give an average of 33.75 per cent, of loss. Whether we, as an 
Association of practical underwriters, have come up to the full measure of 
our duties, is open to serious doubt. We have a zealous Secretary, a good 
library, comfortable rooms at our command; but, except among a faithful 
few, there seems to be a lack of interest in the work. The opportunities for 
usefulness in such an Association as this are undisputed; by the terms of our 
constitution, we are made up of the executive officers, managers, special 
agents and adjusters of insurance companies, embracing in the personnel of 
the Association the entire range of field and office work. We come here, not 
to discuss rates or adopt arbitrary rules for the government of our respective 
companies. The object of our Association is to discuss measures of general ■ 
interest — to compare notes, as it were, upon the many issues which custom, 
local usage or the courts are constantly forcing upon the fraternity — and to 
correct, as far as may be practicable, the irregularities which will creep into 
the practice of the business. We are all learners, and I may venture here to 



30 



remark that I believe the experience of those whom I address, who have been 
longest in the business, is like that of mine, in this, that as the field of our 
work broadens out, confidence in our infallibility lessens. And further, that 
the most aggressive agent or officer, for the first year or two, is he of the least 
experience; and just here may be suggested the most exasperating features in 
the daily practice of our business, the concessions in writing and in adjust- 
ments constantly being made by inexperienced managers and agents. From 
no greater beginnings than ours grew the Association of the Northwest, em- 
bracing some of the ablest minds in the profession, which has left its impress 
upon the policy of the companies with which its members are connected, and 
from which is emanating practical reforms in fire underwriting. To prepare 
the annual papers which are read before that body is a privilege which any 
man may be proud of; and I would here commend to you the careful study of 
the several addresses and the discussions of the last meeting, as printed in 
their proceedings, which may be found in our library. 

The very acceptable reports which the Chairmen of the several Standing 
Committees have just read in your hearing, indicate that, so far as they are 
concerned, no lack of interest exists, and I venture the assertion, that the 
suggestions made in some of them will bear early fruit. May we not be at 
fault in our system of frequent meetings, especially during the summer, when 
special agents and adjusters are most in demand for field work! May not 
this account for the lack of continuous interest in the proceedings! Into our 
discussions, it will have been observed, new men have entered at the monthly 
meetings, who were not posted upon the stage of the previous meeting's dis- 
cussion, while those who were disposed to take an earnest part in the debate, 
and at whose request, perhaps, the discussion was laid over, being absent, 
the question would be by vote disposed of. x 

Without consulting with others on the subject, I am disposed to believe 
that quarterly meetings would give more opportunity for continuous interest 
in the work — the President and Executive Committee being clothed with 
power to call special meetings when necessary. 

The magnitude of the interest which we represent may be gathered from 
recently published reports. I do not know how far I may be allowed to tres- 
pass upon your patience in dealing with dry statistics, but a few figures may 
be tolerated. 

The field covered by a large majority of the companies represented in San 
Francisco, embraces all the Pacific States and Territories, but as we have no 
access to the statistics of other than California business, we must deal with 
that alone. 

From the published reports I find that the 79 companies wrote in Califor- 
nia, during 1877, two hundred and fifty-six millions, four hundred and seventy 
thousand, six hundred and forty dollars ($256,470,640), receiving therefor 
$3,928,744 in gross premiums. Of these the seven local companies wrote 
$80,278,341 and received $1,184,508. The 47 Eastern companies wrote $51,- 
374,702, receiving $911,300, and the 25 foreign companies covered $124,817,- 
597, for $1,832,936. It is proper here to say that the blank prepared by the 
Insurance Commissioner, from which these figures are taken, is defective, in 



31 



that it calls for the gross premiums received by the companies without deduc- 
tions for re-insurance or cancellations. It therefore follows that the same 
business may appear twice, the original and re-insuring company reporting it. 
Of the total amount of premiums received, San Francisco contributed $1,867,- 
834, divided as follows: to the locals, $481,683.52; Eastern, $446,759.65, and 
Foreign, $939,548.74, leaving from the State at large $2,060,910. The losses 
during 1877 aggregated $1,224,754, divided as follows: local, $375,993; East- 
ern, $260,626, and foreign, $588,135. 

The comparative exemption from severe fires in this city and the large 
premium revenue derived from the business herein — amounting, as I have 
mentioned, to $1,867,834 — has brought a very heavy pressure to bear in the 
direction of reduced rates, and this, as is well known, has been conceded by 
the only body having a fixed tariff, the Board of Fire Underwriters, which free 
competition outside seems to be pressing still further downward. We have 
reason to congratulate ourselves that the depth of undercutting, which has 
been reached by our brethren in the East, has not yet been touched by Cali- 
fornia underwriters, and it is for us to so hold up the hands of those who 
have the executive management of our companies that a war of rates and con- 
sequent slaughter of insurance capital may not be inaugurated here. 

It will not be considered out of place in an official report to remind you 
that we miss from his accustomed place among us our good friend Henby 
Smith, who, prostrate with a disease pronounced incurable, calmly and phil- 
osophically awaits his final exit, welcoming death as a relief from pain and as 
the inevitable end of all things. With the mind of an expert he has arranged 
his proofs, and, looking back over the record of his life, pronounces his satis- 
faction, confidently leaving their revision to the Great Adjuster. The con- 
stant inquiries concerning his condition, indicate the esteem in which Henry 
Smith is held by his brother underwriters. 

I cannot better close these remarks than by recognizing the obligations 
which, as a body, we are under to our very efficient Secretary, Mr. J. W. 
Staples, for his constant attention to the duties of his position. It is but jus- 
tice to him to say, that, without his zeal and persistence, the interest in the 
monthly meetings would greatly languish. 

I sincerely hope that 1878 has much that is good in store for us as under- 
writers; the abundant rains, though subjecting us to present personal incon- 
venience, give promise of great prosperity to all interests, and if we are true 
to ourselves and to each other, the results to our profession will not be 
sacrificed to injudicious competition. 

On motion, ordered received and placed on file. 

Mr. L. L. Bromwell moved to amend Article IX of Constitu- 
tion, by striking out the word "monthly" and substituting 
" quarterly" therefor; also, substituting May, August and Nov- 
ember, instead of " each month;" and notice was given by the 
President that the motion would be acted on at the next meeting. 



32 

Resignation of Mr. E. T. Barnes was received and, on motion, 
accepted. The Secretary was ordered to notify him. 

Mr. Spencer moved that the Secretary be directed to file a 
voucher for $25 for services the past year. Seconded by Mr. 
Bromwell. Mr. Bigelow moved to amend by making the amount 
$50. Amendment accepted by Mr. Spencer, and adopted. 

The Secretary was too much moved to do other than mutter a 
few words of thanks. 

Mr. Bigelow read a copy of an ordinance passed by the Board 
of Aldermen of Virginia City, Feb. 12, 1878, for the prevention 
of over-insurance. Insurers are prohibited from writing more 
than ninety per cent, of "the fair reasonable value " of property. 
Unoccupied insured buildings must be watched between 6 p. m. 
and 7 a. m. Insured personal property shall not be kept in such 
buildings unless they are so watched, except licensed warehouses. 
Board of Aldermen may appoint watchmen at expense of delin_ 
quent owners. The penalties range from $200 to $500, and from 
100 days to 6 months imprisonment. They extend also to 
revocation of insurance license. 

Election of officers now being in order, it was moved that the 
Secretary cast the vote of the Association foT Mr. A. P. Flint for 
President, which was done, and Mr. Flint was declared duly 
elected. 

On motion, the Secretary was directed to cast the vote for Mr. 
E. Brown for Vice-President, and he was declared duly elected. 

On motion, the President was requested to cast the vote for 
J. W. Staples for the offices of Secretary and Treasurer. This 
done, he was declared duly elected. 

The Secretary then was directed to cast the vote for Messrs. 
A. D. Smith, O. H. Cole and G. W. Spencer for members of the 
Executive Committee, which was done, and they were declared 
duly elected. 

On motion, adjourned. 



By order of the FIRE UNDERWRITERS' ASSOCIATION OF THE PACIFIC, 
is given to the memory of our esteemed associate and friend. 



Who was born in Gardiner, Maine, 1820, 
And who died in San Francisco, California, March 8th, 1878, 

^gd U feat*. 



He came to California in 1849, and since 1856 has been identified with 
the Insurance profession, and connected with the 

He was a Member of the 

givt yXn&txmitm' ^suswriatiott of tke garifi* 

at the time of his death. 



"With the mind of an Expert, he has arranged his Proofs, and 
looking back over the record of his life, pronounces his satisfaction, con- 
fidently leaving their revision to the Great Adjuster." 



Ijts loss is deplored bg all, tspeciallg bg hts Insurance Issoctafes. 



35 

LIST OF OFFICEES FOR 1876. 

B. F. LOWE President. 

H. H. BIGELOW Vice-President. 

J. W. STAPLES Secretary and Treasurer. 

Executive Committee. 

L. L. Bbomwell, J. R. Garniss, Geo. F. Grant. 

LIST OF OFFICERS FOR 1877. 

GEO. D. DORNIN President. 

W. L. CHALMERS Vice-President. 

J. W. STAPLES Secretary and Treasurer. 

« Executive Committee. 

E. Brown, W. J. Landers, A. D. Smith. 

Standing Committees for 1877. 

LOCAL AGENTS. 
Henry Smith, J. R. Hamilton, C. H. Cushing. 

FORMS OF POLICIES. 
W. J. Landers, H. H. Bigelow, W. J. Callingham. 

LOSSES AND ADJUSTMENTS. 

Geo. W. Spencer, Jas. R. Garniss, Wm. Sexton. 

LEGISLATION AND TAXATION. 

J. F. Houghton, Julius Jacobs, Geo. F. Grant. 

FIRE DEPARTMENT AND WATER SUPPLY. 
E. Brown, A. R. Gunnison, Z. P. Clark. 

STATISTICS. 
Wm. Macdonald, J. D. Bailey, W. J. Stoddart. 

LIBRARY. 

J. W. Hart, Hugh Craig, S. D. Mayer. 

3 



36 



LIST OF OFFICEKS FOE 1878. 

A. P. FLINT President. 

E. BROWN Vice-President. 

J. W. STAPLES Secretary and Treasurer. 

Executive Committee. 
A. D. Smith, O. H. Cole, G. W. Spenceb. 

Standing Committees for 1878. 

LOCAL AGENTS. 

L. L. Bromwell, Z. P. Clark, Geo. F. Grant. 

FORMS OF POLICIES. ^ -v^ 

A. E. Gunnison, E. E. Potter, Bobert Dickson. 

LOSSES AND ADJUSTMENTS. 

Geo. D. Dornin, Win. Macdonald, W. L. Chalmers. 

LEGISLATION AND TAXATION. 

J. F. Houghton, D. J. Staples, C. T. Hopkins. 

FIRE DEPARTMENT AND WATER SUPPLY. 

C. M. Nichols, 0. Hawes, S. 0. Hunt. 

STATISTICS. 
A. D. Smith, W. J. Callingham, C. J. Van Tassel. 

LIBRARY. 

J. W. Killjoy, Geo. W. Spencer, L. Beck. 



LIST OF MEMBERS. 



B. F. Lowe, Adjuster. 

L. L. Brouiwell, Special Agent and Adjuster, Phoenix and Home Insurance 
Companies. 

Geo. F. Grant, Special Agent and Adjuster, North British & Mercantile 
Insurance Company. 

J. W. Hart, Agent, Scottish Commercial Insurance Company. 

Z. P. Clark, Agent, German-American Insurance Company. 

H. H. Bigelow, General Agent, Home Mutual Insurance Company. 

*R. H. Magill, General Agent, Home Mutual Insurance Company. 

*E. T. Barnes, General Agent, California Insurance Company. 

Wm. Sexton, Special Agent and Adjuster, Fireman's Fund Insurance Com- 
pany. 

A. D. Smith, General Agent, Northwestern, Amazon and Fairfield Insur- 
ance Companies. 
— Wm. Doolan, Special Agent and Adjuster, State Investment and Insurance 
Company. 

tB. C. Dick, Agent, Kansas Insurance Company. 

Geo. W. Spencer, Special Agent and Adjuster, iEtna Insurance Company. 

J. W. Staples, Adjuster. 

E. Brown, General Agent, Faneuil Hall and Lycoining Insurance Com- 
panies. 

A. J. Bryant, President, State Investment and Insurance Company. 

J. R. Garniss, Adjuster. 

J. D. Bailey, General Agent, Union Insurance Company. 

A. R. Gunnison, Special Agent and Adjuster, Commercial Insurance Com- 
pany. 

Robert Dickson, Manager, Imperial, Northern and Queen Insurance Com- 
panies. 

Geo. D. Dornin, Secretary, Fireman's Fund Insurance Company. 

{Henry Smith, Special Agent and Adjuster, Liverpool & London & Globe 
Insurance Company. 

H. W. Snow, Special Agent and Adjuster, Commercial Union Assurance 
Company, etc. 

W. J. Landers, Manager S. F. Agency Guardian Assurance Company. 

E. E. Potter, General Agent, Potter, Jacobs & Easton Agency. 

J. F. Houghton, President, Home Mutual Insurance Conrpanj'. 

W. J. Callingham, General Agent, Royal Canadian Insurance Company. 

R. G. Brush, City Agent, State Investment and Insurance Company. 

§D. L. Kirby, Associate Manager, Royal Canadian Insurance Company. 

§W. W. Dudley, Illinois State Agent, German-American Insurance Com- 
pany. 

Wm. Macdonald, Special Agent and Adjuster, Imperial, Northern and 
Queen Insurance Companies. 

C. T. Hopkins, President, California Insurance Company. 



38 



C. R. Story, Secretary, Home Mutual Insurance Company. 
W. L. Chalmers, Special Agent and Adjuster, Hutchinson &, Mann's Agency. 
J. R. Hamilton, General Agent, Commercial Union Assurance Company. 
T. C. Grant, General Agent, North British & Mercantile Insurance Com- 
pany. 
Chas. H. Cushing, Secretary, State Investment and Insurance Company. 
W. J. Stoddart, Agent, New York Underwriters' Agency, etc. 
A. P. Flint, Manager, Hartford Fire Insurance Company. 
Hugh Craig, General Manager, New Zealand Insurance Company. 
H. R. Mann, Agent, Hutchinson & Mann's Agency. 
• Julius Jacobs, Agent, Potter, Jacobs & Easton Agency. 
Geo. Easton, Agent, Potter, Jacobs & East n Agency. 
$Jas. Kip, formerly of the London Assurance Company. 
Samuel D. Mayer, City Agent, Commercial Union Assurance Company. 
H. L. Roflf, Special Agent and Adjuster, New Zealand Insurance Company. 
Dave Rorick, Agent, American Central and St. Joseph Insurance Com- 
panies. 

C. P. Ferry, Inspector of Agencies and Adjuster, New Zealand Insurance 

Company. 
$E. E. Ryan, Agency at Chicago, 111. 

Oliver Hawes, General Agent, Connecticut Fire Insurance Company. 
S. O. Hunt, Agent, Jonathan Hunt <fe Son's Agency. 

D. J. Staples, President, Fireman's Fund Insurance Company. 

Joseph W. Kinsley, General Agent, Security and Manufacturers' Insurance 
Companies. 

Win. Frank, General Agent, Hamburg-Magdeburg Fire Insurance Com- 
pany. 

Henry Balzer, Agent, Svea, North German and Helvetia Insurance Com- 
panies. 

L. Beck, City Agent, Svea, North German and Helvetia Insurance Com- 
panies. 

J. A. Jones, Manager, Royal and Norwich Union Insurance Companies. 

C. M. Nichols, Surveyor of the Board. 

C. J. YanTassel, City Agent, Continental Insurance Company. 

O. H. Cole, Special Agent and Adjuster, Royal and Norwich Union Insur- 
ance Companies. 

T. A. Mitchell, Special Agent and Adjuster, Jonathan Hunt & Son's Agency. 

F. F. Stone, Agent, Lamar Insurance Company. 

C. Mason Kinne, Special Agent and Adjuster, Liverpool & London & Globe 
Insurance Company. 

P. Outcalt, Special Agent and Adjuster, Royal Canadian Insurance Com- 
pany. 

J. C. Jennings, General Agent, Manufacturers' Insurance Company. 

Geo. E. Butler, Manager S. F. Agency London Assurance Company. 
/ Chas. D. Haven, Secretary Union Insurance Company. 

* Resigned, t Dropped from the Roll. ^Deceased. § Honorary Member. 



PROCEEDINGS 



OF THE 



Fire Underwiters 1 



Association of the Pacific, 



FOR THE 



Years 1879 and 1880, 



AT 



SAN FRANCISCO 



CALIFORNIA. 



GEO. SPAULDING & CO., STEAM BOOK AND JOB PRINTERS, 

414 Clay Street, San Franeiseo. 

1880. 



PROCEEDINGS 



OF THE 



THIED ANNUAL MEETING 



OF THE 



FIRE UNDERWRITERS' ASSOCIATION 

OF THE PACIFIC. 



The Third Annual Meeting of the Fire Underwriters' Associa- 
tion of the Pacific was held in the room of the Underwriters' 
Fire Patrol, at two o'clock p. m., Tuesday, February 18th, 1879. 

A. P. Flint, President, occupied the Chair. 

Present— Messrs. A. P. Flint, L. L. Bromwell, H. H. Bige- 
low, A. D. Smith, Wm. Doolan, Geo. W # . Spencer, E. Brown, 
J. D. Bailey, A. B. Gunnison, Geo. D. Dornin, W. J. Landers, 
E. E. Potter, Gen. J. F. Houghton, W. J. Callingham, C. T. 
Hopkins, W. L. Chalmers, O. Hawes, D. J. Staples, W. Frank, 
C. M. Nichol, O. H. Cole, Col. C. Mason Kinne, J. C. Jennings, 
Geo. E. Butler, E. W. Carpenter, W. P. Thomas, J. G. Edwards 
and J. W. Staples. 

Minutes of previous meeting (regular monthly) were read, 
and, on motion, approved. 

Mr. Bromwell then arose and said: 

Mr. President and Gentlemen : I take pleasure in introducing 
to you Mr. W. R. Porter, of San Diego and San Bernardino. 



4 



The Chair welcomed Mr. Porter in the name of the Associa- 
tion. 

The minutes of the special meeting of the Association, held 
February 4th, were read by the Secretary. 

President— Gentlemen, you have heard the minutes of the last 
special meeting of the Association. What is your pleasure with 
reference to them ? 

Mr. Kinne — Mr. President, I think the word " perhaps" 
should be left out of that report, as Mr. Craig admitted his un- 
professional and discourteous conduct. 

Mr. Spencer — I agree with Mr. Kinne that it is an acknowl- 
edged fact, and no "perhaps" about it. 

President — A motion to correct the minutes is in order. 

Mr. Kinne — I move that the Secretary erase the word perhaps, 
and report be approved. 
Seconded. 

President — If there are no further objections, the Secretary's 
report will stand approved as corrected. So ordered. 

President — We will now hear the report of the Treasurer. 
Read by the Secretary. 

REPORT OF TREASURER. 

RECEIPTS. 

Balance on hand at last annual report $62 30 

Admission fees, new members 37 50 

Annual dues 170 00 

Dividend from bank 1 98 

$271 78 



DISBURSEMENTS. 

Paid Secretary $50 00 

Paid N. Gray, account funeral expenses 13 00 

Paid Spaulding & Barto, printing reports 55 00 

Paid W. U. Telegraph Co 4 50 

Paid Electric Pen Co., two bills 3 50 

Paid H. S. Crocker & Co., four bills 12 50 

Paid Insurance Journals 17 95 

Paid D. Hicks & Co., binding books 7 50 

Paid postage and envelopes 50 



164 45 



$107 33 
Cash on hand $20 30 

Cash in bank 87 03 

107 33 



J. W. STAPLES, 

Treasurer. 
E. &'0. E. 

San Francisco, February, 1879. 
Approved: A. D. Smith, 

Oliver H. Cole, 
Geo. W. Spencer, 
Executive Committee. 

President — What is your pleasure, gentlemen, in regard to 
the Treasurer's report ? 

Mr. Kinne — I move it be received and placed on file. 

Mr. Cole — Second that motion. 

Carried. 

Mr. A. P. Flint, President, reads his address. 

PRESIDENTS ADDKESS. 

I am very glad that the frequency of our meetings and the ample reports 
of our various committees relieve your presiding officer from the necessity of 
making extended remarks upon this occasion. I shall not, therefore, detain 
you but a few moments, before calling for the regular reports. 

I congratulate you that our Association has increased its membership dur- 
ing the past year. We have received fifteen regular and two honorary mem- 
bers, making our present number sixty-seven regular and six honorary mem- 
bers. 



Death has invaded our ranks and removed two of our number — Henry 
Smith and W. J. Stoddart — to whose memory we have paid the proper tribute 
of respect. They have gone from our sight, but will long live in our mem" 
ories. 

The year just closed had but little to distinguish it from the preceding one. 
The report of our Commissioner shows a falling off in the amount of busi- 
ness transacted, but the underwriters are to be congratulated that the loss 
column shows a corresponding reduction. I shall not trespass upon the field 
of the Committee on Statistics, but leave them to give you the facts and 
figures. 

The amendment to our Constitution, proposed at the last Annual Meeting, 
reducing the meetings of the Association from monthly to quarterly, did not 
meet with favor We have, therefore, continued to meet every month, and 
the attendance at the meetings, when topics have been assigned for discus- 
sion, gives evidence of the interest in the Association. I believe we are all 
convinced of the value and importance of our Association, and recent dis- 
cussions have shown that its influence is being felt. While its decisions have 
no legal force, they may and should have an influence quite as potent for 
good to the interests of the fraternity. But we must not lose sight of the 
main object of our organization, which is, in a word, to educate — first, our- 
selves. 

In this profession which we have chosen we must ever be learners ; and, 
unlike most other professions, our text-books are few. What we gather must 
be in the great field of experience. Hence the greater need of this Associa- 
tion, that we may, by "the interchange of views, opinions and personal 
experience," assist each other — each one adding his quota to the common 
fund of information, thus becoming co-educators. 

Second — ihe public. I believe it is the duty of the Association to instruct 
the public touching the relations of insured and insurer, and the duties each 
owes to the other, by diffusing information which will be of great benefit to 
all, and break down the antipathy which seems to exist against insurance 
companies, more particularly in the minds of all juries. 

We can all bear witness to the ignorance existing — in many cases where we 
should least expect to find it — upon the simplest principles of underwriting, 
and the rights of either party in the contract commonly called " a policy." 
Oftentimes the labors of an adjuster are increased fourfold by virtue of this 
ignorance which always breeds suspicion. 

How, then, shall we meet this responsibility? In our membership we in- 
clude most, if not all, the adjusters and specials of this coast — the active men 
of the profession, those who come in contact most frequently with the pub- 
lic, and from whom, in a large measure, they form their opinions of under- 
writers and underwriting. Let them, and every one of us, feel that ice have 
a part to perform; that we, by our words — and tenfold more by our acts — are 
raising the profession of underwriting, making it honorable, not reducing it to 
the level of tricksters. Let us show that we are worthy to be entrusted with 
the immense interests confided to our keeping, and that it is our aim alike to 
protect the interests of insured and insurer. 



We should use that great educator, the Press. We have a journal devoted 
to our interests, one which has always battled mantully for the right, and we 
should sustain it. But we need to use the daily press more; and I beg to 
suggest that we should have a committee whose object shall be to furnish, 
from time to time, articles taken from the insurance journals, transcripts of 
important decisions in our courts or other information touching the interests 
of underwriters, to our city and country papers, and by this means reach the 
public. The seed thus sown will return to us one hundredfold. 

But I am wearying your patience, and will not keep you longer from th;it 
which is of more interest, the reports of committees 

Mr. Cole — Move the report be received and placed on file. 

Seconded and carried. 

President — Next in order is the report of the Standing Com- 
mittee on " Local Agents/' Mr. Bromwell, Chairman. 

Mr. Bromwell — Mr. President and Gentlemen : I did not ex- 
pect to have the pleasure of presenting my report in person this 
year, for the reason that I was out of town, and sent it to my 
friend Edwards, who kindly put it in solid shape. 

ADDRESS. 

Another twelve months of zealous development of business in our field of 
persistent, ambitious effort to improve individual interests and those of our 
respective companies, brings us together again — for what? 

•'Looked at from below, all things diverge, but looked at from above, all 
things run into one another and combine." It is from the exalted view, 
whose influences are described in the latter part of this philosophical apho- 
rism, that we mark out the purposes of our annual gathering. To those 
influences may be ascribed the gradual enlargement or extinguishment of the 
contracted sphere of individuality, and the full and lofty development of gen- 
eral interests. The immeasurable range of the business which this organiza- 
tion is designed to promote and harmonize, requires that there should be, 
periodically, such a i esting place as is now furnished by this meeting, in order 
that the lessons hurriedly learned by individuals in the rapid march of pro- 
gress, may be deliberately revised by the sagacity that lies in a multitude of 
council, and be crystallized by the same wise influence into a code of endur- 
ing principles. 

In the general summing up, your Committee on Local Agents will accept 
the truism that " error is a thing not to be forgotten " if we would make prac- 
tical application of the conquests of labor, diligence and experience. On 
such matters, we shall be as specific as the extended subject under considera- 
tion will warrant. 



8 



It is a general fallacy that fire insurance is of English origin, and, there- 
fore, characterized by the peculiarities of English thought and action. But 
this business is traced by Jacobi, as far back as 1623, to the provinces near 
the Vistula, in Eastern Prussia, where mutual insurances were effected upon 
buildings and farm products solely. It would be a most interesting study to 
follow the business in all its historical details, from the planting of the seed 
two hundred and fifty-six years ago, down through all its experiences — as va- 
riable as the currents of air; — through its cautious speculation as to the 
future; its probing through misgiving and doubt; without tangible or scien- 
tific rules or legitimate methods; without universally recognized truths or 
practices; without classifications or consequential deductions, until, step by 
step, we reach the present mighty plane of action, divorced in a great meas- 
ure from the perplexities incident to ignorance and speculation. The seed 
has germinated and the plant grown to an imperishable sturdy tree of life, 
with a firm hold upon mother earth, and with its protective branches, fur- 
nishing capital and labor — the world's great productive factors — with an 
almost unlimited sphere for the promotion and enlargement of industries, by 
removing the principal hazard of loss. 

Branching out from the main trunk of the insurance system of to-day, is 
the great growth of agency representations, stretching out over the entire 
globe. The interests involved in this connection are of such magnitude, that 
too much thought, study, and cultivation cannot be expended toward harmo- 
nizing the mutual relations of constituent and representative. From the very 
extensiveness of the business, more than a moiety of the ever increasing re- 
sponsibilities must devolve upon this creation of necessity — the agency repre- 
sentation. 

Ordinary agency has not always enjoyed legal protection, and hence the 
rather ubiquitous sentiment of earlier days, that "men ought not to trust 
when they cannot exact obedience to the terms of the trust." Looking com- 
paratively at the present status of our agency system, we have indeed made 
rapid transit, for through this channel chiefly, flow the millions, aye, bil- 
lions of insurance income which measure the important trust that has been 
confided to the insurance companies. The great and almost unlimited dis- 
cretionary powers and privileges which have accompanied the partial delega- 
tion of that trust to the representative agencies, require our most careful 
consideration, and the prompt adaptation of such forms as may be developed 
by established principles or by general or particular experience. 

The sub-division of insurance labor, according to present practice, may be 
classified as follows: 

Surveyors or Mechanical Agency — Acts confined to mere solicitation without 
power to bind principal. 

Qualified or Full Agency — Discretionary power to bind principal and issue 
policies. Acts and utterances so far as third parties are concerned establish 
liability of the mandator. 

Broker — The representative by mandate of the assured in whose interest he 
is recognized. 

We will fiist consider the obligations and duties of the surveyors and qual- 



ified agents to their principals, and also to their customers. It is in the 
delicate delineation between the interests of the company and those of the 
customer, that the tact and integrity of an agent come into play. Circum- 
stances may arise in which the happy medium between those interests cannot 
be kept, and the agent must incline to one or the other. Which shall he 
favor ? Appealing to his professional honor is the fact that the company has 
placed him in a position of trust, and that his first duty is to the trustor. Be- 
sides, the company is the party which pays his pecuniary compensation. 

"Be it for better, be it for worse, 
Be ruled by him that has the purse." 

But the same self-interest which calls to mind this distich will also point 
the moral of it with liberal interpretation. If the agent's profit comes directly 
in pecuniary shape from the company, the customer is the source from which 
the possibility of that profit originally rises. Amid the conflict of such 
promptings and inspirations, the agent must train his mind to a judicial 
severity and place the right where he believes it to belong. Companies or 
customers of the better sort will respect him for a judgment given in good 
faith although it may be against themselves. 

Passing now from the moral to the legal relations of company agent and 
his customer, the company not only finds the capital and means necessary to 
the agent's profit, but, within the restrictions defined in the commission of 
appointment, the company is responsible for the acts and utterances of its 
agents. An acceptance of the agency is a prlma-facie supposition that the 
agent is possessed of the requisite skill and capacity for the faithful perform- 
ance of the trust. If he does not possess these qualifications, and is guilty of 
negligence, his right to compensation or commissions is forfeited. (Boston 
Carpet Co. vs. Journeay, 1 Daly, N. Y., 190.) 

This negligence or disobedience of instructions, even with a view of further- 
ing his principal's interests, renders the agent liable for damages by such 
non-performance or violation of orders. (Bank of Mobile vs. Huggins, 2 Ala., 
206. Hamilton vs. Cunningham, 2 Brock., 350. Hardeman vs. Ford, 12 Geo., 
205.) Specific instructions must be specifically obeyed. (Wharton on Agency, 
S., 266.) 

The agent cannot relieve himself from liability on the score of ignorance. 
An agent's employee is not liable to the principal, unless such ancillary agent 
has direct discretionary powers from the common principal, the primary agent 
simply directing the object to be attained. (Loomis vs. Simpson, 13 Iowa, 
532. Hobbs vs. Duff, 43, Cal., 485. Wilson vs. Smith, 3 How., U. S., 763.) 

Accurate account must be kept by the agent of receipts, not only of moneys, 
but property coming into his possession by reason of the agency. (Smith on 
Merc, law, 47-49. Clark vs. Moody, 19 Mass. B., 145.) 

If the agent can establish adverse claims aliunde, be may do so, but the 
proof must be bona fide and unmistakable. " So far as concern commission, 
"his failure to keep accounts, is'generally fatal. For, as is said by Lord 
11 Eldon, a man standing high in a relation imposing a duty to keep regular 
11 accounts, cannot be permitted to make a demand for work or labor in that 
" character, of which he has kept no account." (Wharton.) 



10 



An owner can recover from the agent whatever was recoverable from the 
insurer, supposing there was no negligence on the agent's part. (Perkins us. 
Ins. Co , 4 Cowan, 465. Fomin vs. Oswell, 3 Camp., 357. Park vs. Ham- 
mond, 4 Camp. 344.) 

The same cause for action and liability of agent to his customer, arises 
when by his carelessness some provision is neglected whereby the insurers 
are relieved. (Sedgwick on Damages, 6th, 402.) 

An agent cannot defend on account of the agency, the result of carrying out 
illegal orders. (Ford vs. Williams, 24 N. Y., 459. Wright vs. Eaton, 7 Wis., 
595.) 

So also is the agent liable for deceitful and false statements ou his princi- 
pal's behalf, whereby third parties are defrauded. (Milwaukee R. R. vs. 
Finney, 10 Wis., 388.) 

It may be accepted as a well settled principle of common law that an 
agent diligently acting within the scope of his authority, and disclosing the 
agency fully to third persons, fulfills all requirements and renders the prin- 
cipal liable for consequences; furthermore, whenever doubt or ambiguity 
exists as to the agency or liability of principal or agent, that construction will 
be given which gives effect to the contract and makes the principal liable. 

(Pars, on Cont., 95 Kent's Com., 460.) 

Commissions are not due or payable until the transactions are complete. 
(Walker vs. Tirrell, 101 Mass., 257. Trundy vs. Hartford Steam Co., 6 Rob., 
N. Y., 312.) 

The rate of commission, when no per centum is agreed upon, will be de- 
termined by custom. (Paley Agency, 101-2.) 

Before acceptiug applications or loss receipts from insured's agents or 
attorneys, the fact of the agency must appear on the instrument, and it must 
appear by the instruments themselves that there was an intention to exercise 
this authority as binding upon the principal. (Hunter vs. Giddings, 97 Mass., 
41. Wood vs. Goodridge, 6 Cush., 120.) 

An agent cannot act as principal and agent at the same time; it therefore 
follows, that a policy issued by himself on agent's own property, unless 
sanctioned and approved throughout by the company, is prima-facie fraud- 
ulent, and has no validity in Court. 

It is observed we make no distinction between the surveyor and full agent, 
on the ground that by granting powers to bind principals in the former case, 
the line is narrowed down to one of restriction or limit, and the law is as 
applicable to the one as to the other, within their respective limitations. 

In thus bringing forward the liability of agents to compmies, and defining 
even briefly an outline of their responsibilities, we realize that the companies, 
and you gentlemen, their field aids, have been derelict in your duties in this 
respect. The companies employ specials, and build up the all absorbing am- 
bition of the latter in one word — business. The special, as contracted in idea 
as the company employing him, glides into the field, and his particular world 
revolves around his particular sun; and this sun, which is business, even out- 
shines the great luminary itself. No other thought, no other requirement is 
necessary to earn a comfortable salary. And what is the result ? The agent 



11 



has a toy, it is ruse tinted and beautifully colored with commissions; every- 
thing moves smoothly, and both special and agent are making a record. Little 
by little, encroachments are made on the good nature of the company. This 
bar, and then that one, is thrown I own, until there is no fence at all! All 
those limited powers and privileges which have been by piece-meal fcO reluct- 
antly granted, seem in too many instances, to be expanding into an absolute 
surrender of all orthodoxy, and into a free abandonment of those safeguards 
which o:her commercial and governmental agencies deem conditions precedent 
to the establishment of agency. Instead of the agent merging into the prin- 
cipal, it is a fact very patent that the agent is fast swallowing up the prin- 
cipal. In this connection, it would be amusing, if it were not so serious, to 
listen to the general howl made by companies concerning compensation, in- 
structions from the courts on waiver and estoppel, and laxity of the agency 
system. Why, agency itself is the creature of usage, and usage, the veritable 
offspring of the companies. It is estimated that we have 1,248 represen- 
tatives on this coast subservient to San Francisco executives, and the question 
is put directly to each one of you who create these agencies and mingle with 
them, how much interest aud time do you employ (when circling around), 
in educating agents up to a proper appreciation of their position — with its 
responsibilities — with its duties, not only of a material nature, but in amoral 
sense also ? We maintain that it is our bounden duty to say to our agents 
in just so many words, " You may overstep the bounds of your agency and 
entail loss upon your companies by negligence or indifference to instructions; 
you may be lax and derelict in making returns and remittances; or by sub- 
mitting exceptional hazards for examination. You may unauthoritative^ 
waive vital and important rights under policy conditions, estopping your 
principal from defending his just interests; but if you do, you are amenable in 
damages to headquarters." (Wright vs. Dannah, 2 Camp., 203. Church vs. 
Ins. Co., 1 Mason, 341. Copeland vs. Ins. Co., 6 Peck, 189. Ely vs. Han- 
ford, 65 Ills., 267 

The agency should be annulled on the first offence ! Better have no such 
machinery than sustain an ill-devised and ill-developed system, for "poor 
peasantry means poor kingdom" — "like man like master." If the compa- 
nies are void of back-bone and precision, of course, we need not look lor these 
particular attributes of character in agents, and as we hurry along after the 
man making the greatest haste, it is easily discernible what a single evil like 
this, must have on the rest of the flock ! 

We realize that our agency system is the very lode upon which we mine, 
and while sotne of the ore costs more to mill than it is worth, and some is 
refractory, some high grade and others low grade, it all has to be worked just 
the same; but once in a while, we strike & pocket, rich in cautiousness, fealty, 
honor and profit, and it is worth just two dollars for one. It is compensation 
enough to the special; it is more satisfactory to the company than just two 
dozen of the other kind. 

Reverting now to the technical part of an agent's duties, and looking at the 
points in his practice which indicate the difference between tact and integrity 
on the one side and carelessness and dishonesty on the other, we desire to 



12 



impress on his mind the necessity of acquiring facilities for the prevention of 
over-insurance. It is from this source that springs an ever-swelling tide of 
fraud and litigation. Insurance companies, in resisting the attempts of legis- 
latures to make the amount insured on buildings the legal measure of their 
value in the event of loss, assert the impossibility of making precise valua- 
tions at the time of issuing the policy. This objection has more force in 
regard to the locality where the principal business of the company is con- 
ducted. There is not time for the precision required, and the extensiveness 
of the locality would entail the necessity of maintaining an expensive corps of 
experts. Much of this difficulty vanishes under the circumstances in which 
the local agent is placed. He has, ordinarily, time at his disposal. The area 
of his operations is comparatively limited, and the character of the buildings 
therein are not so diverse as in the large centers of business. Without the 
assistance of an expert mechanic, he may not be able to value a building 
precisely, but the application of the rules of cubic measure which are learned 
at the common schools, will give approximately the quantity of material 
which has gone to the construction, and from this standpoint the cost of 
material, the other expenses and the deteriorations may be computed. Such 
a valuation, of course, will not be minute enough for the adjustment of a 
loss, but the ability and willingness to make it would be sufficient to remove 
the temptation to fraudulent over-insurance which sometimes presents itself 
to the applicant for insurance when he finds himself in communication with 
an inexpert or a careless agent. 

In considering the relations of the companies to their agents, we leave out 
of the question that " that necessary evil," — "the broker " — deeming this to 
be a question outside of our province as a committee on local agents. 

We believe and know that the insurance agents of the Pacific Coast, a3 
compared with any other section, are above tbe average in point of intelli- 
gence, business probity and responsibility; and further, that they are fully 
alive (in due proportion) to the peculiar delicacy of their position as between 
customer and cumpany; but, as stated before, the proportion not appreciating 
the agency are either unfit for the place or badly educated by the principals. 
It is a miss ; on of authority to counsel as well as constrain; to assist as well 
as command; to develope rather than absorb decent, honorable activity; to 
grant liberty of action; but neve?" license. " Healthy reason," says Franklin, 
"has this peculiarity, that where people will not listen to it, it never hesitates 
to make itself felt;" and insurance companies who build up, but on one foun- 
dation — business — propped up solely by personal interest — expediency rather 
than justice — must sooner or later pull down the mistaken structure, and start 
again, on the tripple foundation of union, progress, and conservatism — the 
co operation of both personal and general interests, as a certain inducement 
of profit and social advantages. How best to consolidate these interests, you, 
as visiting specials and executives, must determine. Example as well as 
precept must largely enter into the calculation, and the " moral empire over 
self" in these times of crowding, elbowing competition, means something 
more than winking at a wrong by not grappling and choking it promptly ! 

We have in our mind many local agents full of real devotion to their com- 



13 



panies, with minds (and bodies, too) sufficiently elastic to honorably outrun 
competition, but with a conscience stubborn enough also to retain the respect 
of contemporaiies, and rebuke the occasional importuning of improper cus- 
tomers for improper privileges. We call these " well raised !" Promptness, 
dispatch, accuracy; a live interest in their agencies, their customers, their 
companies, and the whole business, make a cheerful streak of sunshine to 
gladden the hearts of us travelers when we fall into such keeping for a few 
days. This sort of energetic vitality is an antidote for the blues. 

On the other hand, there is the shiftless, untidy, harem-scarem agent, who 
rejects dwellings because his commissions don't pay the trouble to write and 
report them, but who has a most wicked appetite for specials. The general 
characteristics of such an agent reveal themselves by some particular and 
separate part of him. It is not necessary to study minutely his whole condi- 
tion. As the strength of a man or the grace of a woman may be fully de- 
noted by a single or separate member or line of the bodily formation, so by the 
symmetry or irregularity of an agent's report may be estimated his general 
character for precision and efficiency. A sailor (to borrow part of an illus- 
tration used at a recent meeting of college alumni in an Eastern State) can 
tell the nationality of a ship by the general trim of her sails and rigging; and 
even without such technical observation as is required for this nautical ex- 
pertness, one can tell an agent's grade of capability by the general trim of 
his record books. Where such a book is loosely kept, you will always find 
the agent whose transactions it records over-particular in ornamenting, beau- 
tifying, tintiDg and sugar-coating some miserable, risky, old special hazard, 
but leaving plenty in the way of survey, to guess at ; full of moaning, growl- 
ing and fault-finding at the rigid discipline (?) he is subjected to when we 
stop off to invoice the business and clean up! With just such a case as the 
one in point, where the company had lost by fire two of the three risks writ- 
ten, we were reminded, after listening to the agent's argument, of the physi- 
cian and his first case at obstetrics: " We lost the child, and the mother also 
died on my hands; but, by careful nursing, are hopeful of saving the old man/" 

Fertilize your field, gentlemen, with intelligent culture; introduce a little 
more moral electricity in your dealings and management, ever keeping in 
view that legislators and courts, in seconding, opposing or interpreting the 
iaws, reach out and grasp after relations. As you act, so do you contribute 
towards these relations, and establish custom. As it is easier to tear down 
than build up, and as the entire profession is interested in the "tearing 
down," we should remember that fatal to perfection is the feverish haste and 
impatience for results, so incident to this peculiar business. 

There is no doubt that our method of compensating agents without refer- 
ence to net results, is of itself very injudicious, and must sooner or later un- 
dergo a reform by making the agent directly interested in the profit and loss 
at his agency. Like the value of every commodity, the price paid for agents' 
services has been determined by the ratio of supply and demand, and the de- 
mand in this limited field has exceeded the supply; hence the laxities of the 
system, and the commissions so increased that it is questionable whether, 
without drawing from the general agents' contract, or reduction of present 



14 



gross commissions paid, the business will justify any further burdens. Cer- 
tain it is, nevertheless, that the principle of interesting the agents in profits 
is a correct one, and establishes a partnership which at once stiffens up his 
penetrative qualities as well as his moral backbone. As tilings are at present 
managed, it requires more moral courage than the average of mankind is 
blessed with to weigh a healthy flat commission against that almost unpro- 
nounceable " No." The chances are ten to one in favor of the former! 

With a general withdrawal of this temptation to speculate with insurance 
capital there follows more certain profit, over-insurance receives a checkmate 
faulty construction becomes of important local concern, the moral hazard is 
fully canvassed; in fine, we divide r< sponsibilities and harmonize the general 
inteiests throughout, and this object of itself we have been hunting after 
these many ye f trs! 

We have been appealed to by many of the agents to suggest some other 
method of rates for the coast than the present obtuse and ambiguous arrange- 
ment in the several books in use. Of course, no general tariff can be made 
which would fit exactly and consistently to every particular locality and risk, 
but this has been obviated in a great measuie by the adoption of several rate 
books, graded and apportioned to the several districts and the system of spe- 
cial rating, those particular risks enjoying especial advantages as fire hazards 
We frankly admit that our rates, as a whole on the coast, have become deci- 
dedly complicated and badly mixed, partly on account of the variety and va- 
riableness of rules and their constiuetion, but principally on account of these 
very special rates. Inasmuch as the schedule plan has been worked into 
such universal favor, would it not be wise to use our Board Surveyor in the 
interior and gradually supplant our technical rate books with a positive, 
easily understood specific rate, of every connected hazard at the several agen- 
cies? The end would seem to justify the expense, for the more we simplify 
the rates, the less cause for ugly feeling and bad blood among agents; while 
such simplicity destroys the excuse of a professional rate-cutter, that he was 
in doubt as to the interpretation of this or that rule, or did not fully under- 
stand the application of the tariff. 

The following is contributed by a poetical branch of the family, as exem- 
plifying the risk and effect of following our rate books too closely: 

THE TARIFF-IC END OF PETER FINK. 



In California, lately, lived a man 
Named Peter Fink; a happy soul was he, f < 
With loving wife to double life's short. span, 
And lovely children playing 'round his knee. 
His bank account, from interest alone, 
Supplied all wants and furnished lux'ries, too, 
The cup of life for him seemed overflown 
With every bliss that favored mortals knew. 



* 



15 



He sat, one day, 'mong his green-house plants, 
Secure from wordly bustle, strife and noise, 
He smoked his meerschaum, fell into a trance, 
So mesmerizing were his leisure joys; 
A heavy hand upon his shoulder laid, 
Aroused him, and he awoke, amazed to see 
A nobby gent who swift excuses made 
For breaking in upon his privacy. 



Beg pardon, sir, I trust 
I don't intrude? You see 
I'm special agent of 
The Golden Gate Insurance Company; 
Your many friends solicit me 
To offer you our local agency. 



You're known so well, they say, 
All seem so confident 
You're honest ev'ry way; 
They're sure whatever Fink may represent, 
Will be received by ev'ry resident, 
With unqualified, unquestioned assent. 



And then, to help the same, 
Friends promise you their own, 
And say your very name 
Will bring you other risks, soon as it's known; 
And in a month your business will have grown, 
And cleared the field for you to work alone. 



v. 



There's money in it, too, 
t There's millions in it — yes, 

Bonanzas, sir, for you. 
I know you*re rich, but then you will confess, 
Misfortunes are so great and numberless, 
No man can make too sure his happiness. 



16 



The work is pleasant, light — 
You will accept? Good! Good! 
I thought your head was right. 
This book, " The San Francisco Tariff," should 
Be studied first, 'tis quickly understood; 
You can't mistake the meaning if you would. 



This bond please sign, and then, 
Get sureties on; 'tis true 
Ten thousand to some men 
Might seem a stunning bond; I hope that you 
Will please remember that but very few 
Have eve?' done the business you will do. 



I'll send you full supplies 
At once; a mammoth sign 
To catch the passers' eyes, 
Some blotters to distribute, and a fine 
Large lot of calendars; you'll furnish twine, 
And hang one in each place that don't decline. 



I'll send you needed blanks, 
For which you will receipt, 
Deposit with good banks; 
Report each month a careful, full, complete 
Account of business done; and, I entreat, 
Don't pass the fifth, but remit up neat. 



Next week, on Main street, swung a massive frame, 

Whose flashing letters made the passers blink; 

"The Golden Gate Insurance Co." — the name, 

"Assets, one billion; Agent, Peter Fink." 

Within sat Peter bending o'er a book, 

" The San Francisco Tariff;" low he conned 

Its mystic pages chanting like a brook; 

His frequent gasps of — " now, I'll be dog-oned ! 



17 



What does this mean ?" bespoke a man perplexed; 

Then he'd go out upon the street and stand 

And gawk at buildings which the book indexed 

Class " B, " or " D " — and then the book was scanned; 

And then he'd stare again, and rub his brow, 

Soliloquize — " I see the building plain, 

But is it 'B/or'C/or'D?' somehow, 

Descriptions slip my mind; I'll look again." 

And then he'd read about a Basis rate, 

The minimum, the maximum, and turn 

To Special Hazard Tables and rebate, 

And then he'd add, as he would still discern 

An opening, or privilege, or find 

Deficiencies, exposures, coal oil stored, 

Shake roofs, stove-pipes, partitions, part cloth-lined; 

Steam-boilers, powder, technicals the Board 

Created, indexed with a star to call 

The Agent's notice to it, all these he'd read 

Until he saw a low division wall, 

And then he'd dive into his Tariff creed. 

To rise aghast upon a Mansard roof 

And find a special rate to this affixed; 

And then a front not quite combustion proof, 

Would leave confusion still more badly mixed. 



XI. 



And thus he groped through labyrinthine doubts, 

Until his soul was haunted with their ghosts; 

All day he walked, like Leary, o'er his routes, 

Distributing the blotters; nightly, hosts 

Of ghouls held caraival about his bed, 

Each with a book of Rates from which he screamed 

Instructions, warnings, o'er the agent's head; 

And Peter groaned, talked in his sleep, and dreamed 

Of fires, adjusters' risks — and suicide; 

And sometimes sprang affrighted from his cot, 

And through the window — madly leaped outside 

To add some special rate he had forgot. 

XII. 

He passed his friends unnoticed on the street, 

Absorbed in some vexatious Tariff doubt; 

His cats and dogs fled at his coming feet, 

He whipped his wife, and kicked his children out. 



18 



He changed so fast and grew so lean and lank, 
He had to take a witness, ev'ry time 
He made a draw on his account in bank, 
Before the cashier would pay out a dime; 
His debtors swore in court they knew him not, 
And often beat him on the evidence; 
His fortune went, he sold his house and lot, 
And studied Tariff with his last few cents. 



XIII. 

At last he learned it — notified his friends; 

One offered him a risk, and asked the rate; 

"Let's see," said Fink, "your building — it depends- 

I'll make it out and call this evening late." 

He hired a dray to haul instructions there, 

Then set himself upon a cuibstone nigh, 

And read, and stared, extracted cube and square, 

Deducted, added, and did multiply. 

Thus days passed by, and just as Fink would be 

Rejoicing to escape from gaping fools, 

The mail would bring straight from the company, 

A circular of — " Change in Tariff Rules." 

XIV. 

And when, at last, his weary task was done, 
Poor Peter went to write the risk, Book Four; 
The policy he filled and numbered " one," 
And learned his friend had died long months before. 



XV. 



He got another risk and worked so long 

To get ahead of chaoges in the rate, 

He found, when done, the man was at Hong-Kong, 

Had "busted up in biz " and left the State. 

XVI. 

He lost another risk, because the man 
Desired it to protect a patent right 
And used steam-boilers; Fink, his work began, 
But Fink and patent both ran out— same night. 



19 



XVII. 



Death freed his wife from sorrow and abuse, 
The children all grew up, went to the " bad," 
At last, from Tariff chains, poor Fink got loose, 
They took him 'cross to Stockton, raving mad. 
And there you'll find this Peter Fink— to-day, 
At work on application number one, 
A victim of the mazy, changeful way 
The 'Frisco Board, have local business done. 

In closing our report, your committee beg leave to state that we have im- 
partially considered the several and material shoitcommings of our subject in 
the belief that to make a successful future we must renovate the present. By 
presenting a faithful picture of the every day development of our science and 
suggesting the application of such remedial facts as our devotion to a common 
cause has marked out as meet and proper, we trust that our functions as a 
committee have in a measure contributed towards the general good, the whole 
profession, and the business as an entirety. 

Applause. 

Mr. Dornin — I was about to rise to suggest that a vote of 
thanks be given for the very admirable and meaty report just 
read by Mr. Bromwell, had it not been for the reflections upon 
that much-abused body — the Local Board. As the only member 
here present of the Committee on Tariffs and Rates of that body, 
I take it upon me to say, that if the gentleman only understood 
the labors and annoyances which that committee is subjected to, 
by the difficulties continually arising to adapt general rules to 
suit specific cases, we should have his sympathy. [Laughter. ] 
However, I am quite willing to forgive him, and make a motion 
that the Association extend a vote of thanks to Mr. Bromwell for 
his admirable report. 

Carried. 

Mr. Bromwell — I hope Mr. Dornin will not take offense at any 
expression contained in my report. My friends will give me 
credit for having done as much as anybody to make that tariff 
acceptable, and the writer of the report does fully appreciate the 
difficulties which you have labored under; only it would be a 
great advantage to have the rates in the country simplified as 
much as possible. 



20 



President — Next in order is the report of the Committee on 
Forms of Policies, Mr. Gunnison, Chairman. 

Mr. Gunnison — Mr. President: I would rather the report 
should not be read at all. The fact is, I found myself this morn- 
ing, or about noon, without any report, having depended in a, 
great measure on my fellow committee-men for assistance, which 
was not forthcoming, so I sat down at a late moment and wrote 
out a little apology only. I would not read it, if it was not that 
a little nonsense is recreation, after listening attentively to good 
sense and reason, such as we have just heard, and as the time is 
precious, I would rather the reading be deferred for the reasons 
stated. 

Mr. Smith — I move Mr. Gunnison's report be read. 

Mr. Chalmers — Second that motion. 
Carried. 

Eeport read by Secretary: 
REPORT OF COMMITTEE ON FORMS AND POLICIES. 

To the President of the Fire Underwriters'' Association of the Pacific: 

As Chairman of your Committee on forms of Policies, I have to report an 
apology only. I am aware that it is one of the most important subjects we 
have to consider; in fact, I am so deeply impressed with its importance that 
I dare not attempt anything, with my poor pen, that could assume the shape 
of a report worthy of th:s Association. With due acknowledgements of the 
honor you conferred upon my humble self, I have felt that you made a mistake 
in your selection, and made a sort of kangaroo committee, with a very small 
head and all the strength and energy in the limbs. Of course, the head has 
no valid objection to being a head, provided always that the limbs are willing 
to respond according to their strength. 

I appealed to my fellow-members of the committee to help me out, in my 
dire extremity, as I am painfully aware that, alone, I am unequal to the occa- 
sion. To the kind offices of Mr. Kobert Dickson I appealed, in my blandest 
and most winning style, as the one to whom we always look for intellectual, 
native wit; and to Mr. E. E. Potter, with my profoundest bow, as the em- 
bodiment of all the legal acumen of our most learned and excellent Associa- 
tion. With their help, I knew that you would secure an able, instructive and 
entertaining document, and "one worthy of ourselves!" But I ignomini- 
ously failed to draw a small salvage from either of them, either of wit or 
legal lore. 



21 



To be serious— for this is a very serious matter — must I say that, with my 
poor abilities, I find it a difficult undertaking to add anything new or interest- 
ing to the very able and exhaustive reports, of like committees, furnished the 
National Board of Underwriters and to the Association of the Northwest 
To those I would most respectfully refer all seekers after knowledge in this 
line of thought. But should you wish to know all about it, to gain points 
you never heard of and never may hear again, you must ask some young 
adjuster who has just gotten through with his third or fourth adjustment, 
and saved his scalp, and he can inform you on forms and re-form of all for- 
mer forms, giving you the long and the tall of it, the thick and the short of 
it, Verbatim et literatim; at least, I judge so from my own experience. 

Mr. President, had it fallen to my lot to make this report long years ago, 
-when I was but six months old (in the business), I could have written acres 
upon acres about the forms of policies. But fortunately I have forgotten all 
that. In fact, if I had not forgotten all I thought I knew then, I should know 
but little now. And I find I know less the further I go ! In reality, many things 
that were positive truths then are ridiculously false now; so true it is that the 
more experience we have in this business, the more we know how little we 
know, you know! But it is useless to try to teach the young adjuster of 
losses, for he will not be taught. He is like the boy to whom his father said, 
*' My son, it is folly to spend so much time and money for the young ladies, 
/have seen the folly of it." He replied, " Well, papa, I wish too see the 
folly of it, too." When the young student, just entering upon the mystery 
of policy forms, awakened to the beauties of the study by seeing a nice 
salvage slip through his fingers by a badly written policy, begins to acknowl- 
edge that he knows comparatively nothing, he is then in good condition to 
imbibe knowledge. Until then he is perfectly incorrigible. I have seen 
forms that I leaned upon, in fond confidence (forms of policies, I mean), 
that, before the bright light of a legal decision, melted away like a " baseless 
fabric of a vision." When the cherished prop that I had hugged to my 
manly breast slipped under me, I tripped up on a very small salvage, indeed. 

To try to be serious again, I will say, that, to my mind, the best form is the 
simplest form. I am not going to trouble you with what that is, for it has 
been many times said, a thousand times better said than I can say it. The 
best policy is honesty, so to speak. Who would care for forms or conditions 
if no attempts at fraud were apprehended? In fact, if the dear, insuring 
public was as honest and void of deceit as the underwriters are just and mag- 
nanimous, the average adjuster might be happy— in some other business! I can 
say that on more than one occasion I have met attempts at fraud that made me 
devoutly wish the policy-maker had used a different form; and the next day, 
in another case, as frequently wish he had used no form at all. Oh! for the 
good old days of the first policy-writing — of the old Hartford — when every 
man's word was as good as a bond, and after the fire no questions were 
asked! Those were the halcyon days of fire underwriting. Then there were 
no bickerings over forms and salvages, for the adjustment fiend had not been 
born, and his sweet, winning voice not yet heard in the land. 

Mr. President, this is a minority — an emphatic minority — of one. The wit 



22 



and brains of the committee declined to be represented herein. Hence it is 
as it is. I am no reformer of old forms or concocter of new ones. I take to 
my capacious arms all forms, just as the Supreme Ruler and the policy-maker 
have fashioned them, and proceed to adjust differences according to circum- 
stances. I have not the time or the ability, or the egotism, to attempt the 
adjustment of the thousand-and-one opinions, nor the courage to advance 
one of my own. Hence this apology for having no report, which is 

Respectfully submitted. 

A. R. Gunnison, Chairman. 
Applause. 

Mr. Potter — Mr. President: Being a member of that commit- 
tee, I was just about to arise and apologize to the chairman for 
not having assisted in that report, but since listening to it, am 
inclined to think I displayed my good sense in remaining silent. 
Being an infant in the business, I should probably have spread 
myself and shown my ignorance. As it is, I congratulate myself 
on my modesty. [Laughter.] Mr. Gunnison called on me to 
assist in making up the report. The spirit was willing, but the 
flesh was weak, and I kept putting it off from time to time, 
thinking that we would get together and work it up, but the 
time slipped by, and it was too late. I have no suggestions to 
make, excepting one or two; one in particular I would call your 
attention to, and that is regarding the wording of policies on 
wooden buildings in the fire limits. I have inserted the follow- 
ing clause in one of my policies, viz : ' ' No claim for loss shall 
be considered total on any building partially destroyed by fire 
and insured under this policy, by reason of any law or ordinance 
that prevents its being repaired or rebuilt, but such loss shall be 
estimated and paid the same as if no such law or ordinance ex- 
isted." Another thing, hardly less important, is the insertion 
of the words " hazardous, non-hazardous and extra hazardous." 

I think if there is anything that will make a policy non-con- 
current it is those words. This is caused by each company 
making up its own ' ' Classification of Hazards," to suit itself , 
hence they differ materially. The broker insists upon policies 
being worded alike; the agent complains, not knowing the class- 
ification of the other companies; in fact, it would be a day's 
work to check off the classification of a dozen different policies. 
When the loss comes, both the assured and the adjuster find to 
their sorrow that the policies are not concurrent; for what one 



23 

company calls hazardous, the other company calls extra-hazard- 
ous. Hence they damn the whole hazard family. [Applause.] 

Mr. Gunnison — As chairman of the committee, I would sug- 
gest that Mr. Potter make a supplemental report. 

Mr. Potter — Not at all; not at all. I would request that the 
Keporter do not take this down. 

Secretary — It is already on his book. 

President — What is your action concerning Mr. Gunnison's 
report, gentlemen ? 

Mr. Callingham — I move it be received and placed on file. 
Carried. 

President — The next committee in order, is on Losses and Ad- 
justments, Mr. George D. Dornin, chairman. 

Mr. Dornin — I give way until after the report of Committee 
on Legislation is read. 

Report of Committee on Legislation and Taxation read by 
Secretary. 

REPORT OF COMMITTEE ON LEGISLATION AND 
TAXATION. 

Your Committee on Legislation, in compliance with a resolution of the As- 
sociation, requesting them to frame a suitable ordinance for the adoption of 
cities and towns, creating the office of Fire Warden and denning the duties 
thereof, respectfully beg leave to report the following ordinance, to wit: 

An Ordinance creating the Office of Fire Warden and defining the duties thereof. 

Section 1. The Chief Engineer of the Fire Department shall be ex-officio 
the Fire Warden of the city or town. 

Sec. 2. It shall be the duty of the Fire Warden, immediately after the 
occurrence of any fire by which any property shall have been endangered, 
damaged or destroyed, to institute an investigation into the cause thereof; 
and for this purpose he shall have power to issue subpoenas, administer 
oaths, and compel the attendence of witnesses before him, by attachment or 



24 



otherwise. All subpoenas issued by him shall be in such form as he may 
prescribe, and shall be directed to and served by any police officer or by any 
peace officer of this city (or town.) Any witness who refuses to attend or 
testify in obedience to such subpoenas, shall be deemed guilty of contempt 
and punishable by him, as in cases of contempt in Justices' Courts in civil 
cases; provided, that said officers shall not have jurisdiction to try any per- 
sons charged with commission of a crime for the purpose of inflicting pun- 
ishment therefor, but shall make a written report of the testimony to the 
District or City Attorney, or such other officer as is authorized to prosecute 
criminal cases, and institute criminal prosecutions in all cases in which there 
appears to him to be reasonable and probable cause for believing that a fire 
has been caused by design. 

Sec, 3. When property damaged by fire is in whole or in part covered by 
insurance, it shall be the duty of the Fire Warden to appoint a watchman or 
keeper, subject to the claim of the proper owners, and shall have power to 
fix the compensation of such keeper or watchman, the owner of the property 
paying therefor. 

Sec. 4. Whenever, in the judgment of the Fire Warden, any smoke- 
stack, chimney, flue or stove-pipe endangers that or the adjoining property 
by fire, the Fire Warden shall cause the same to be abated, altered or im- 
proved, as he may think necessary for the protection of the property thus 
endangered. 

Sec. 5. The Fire Warden shall be empowered to enter upon and examine 
any property where he shall have reason to believe there exists a defective 
stove-pipe, flue or chimney for purposes of examination thereof. 

Sec. 6. Any person who shall resist the Fire Warden in the proper dis- 
charge of his duty, or who shall refuse to abate, alter or improve any defect- 
ive stove-pipe, flue or chimney shall be deemed guilty of a misdemeanor, 
and, upon conviction thereof, shall be punished accordingly. 

The adoption of this ordinance by the small cities and large towns through- 
out the State, your committee believe would be of great assistance to under- 
writers in the detection of incendiaries, by dispensing with the necessity of 
making criminal complaints before an investigation can be had, in many 
cases where they are morally certain that a crime has been committed. It 
would allow them to produce before the Fire Warden all pertinent testimony, 
which at present can only be produced after a formal charge of crime is made 
before a magistrate. 

Your committee beg leave further to report that during the last session of 
the Legislature, which closed since your last annual meeting, about the 
usual amount of legislation hostile to the insurance interests of the State was 
proposed, and progressed to various stages of advancement. Among others 
was a bill authorizing mutual insurance companies to organize without capital 
and transact, with but little restraint, the business of underwriting. 

This most dangerous bill to the interests of underwriters and insurers alike, 
was put through both branches of the Legislature during the last days of the 
session, before it came to the knowledge of your committee, but by a careful 



25 



and energetic representation to the Governor of its evil effects, your commit- 
tee succeeded in stopping it in his hands, and we are pleased to report that 
none of the proposed hostile legislation encumbers the statues. 
All of which is respectfully submitted. 

J. F. Houghton, 
D. J. Staples, 
C. Thos. Hopkins. 

Your committee beg leave further to report, without recommendation, for 
such action as you may please to take, the accompanying draft of a bill 
which they learn will be introduced in the Nevada Legislature this week, en- 
titled " An Act to detect aud punish incendiarism." 

J. F. Houghton, Chairman. 

San Francisco, Feb. 18, 1879. 

AN ACT TO DETECT AND PUNISH INCENDIARISM. 

The People of the State of Nevada, represented in the Senate and 

Assembly, do enact as follows: 

Section 1. Whenever it is made to appear by the complaint of any citizen 
that any building or other property has been set on fire or attempted to be, 
or burned from an unknown cause, or any cause not clearly accidental, it 
shall be the duty of any Justice of the Peace of the county where such fire 
occurred or was attempted, and to whom such complaint shall be made, to 
immediately summon three good and lawful citizens, who shall be house- 
holders in the county, to appear at the place of the fire at the time fixed as 
soon as possible, to enquire when, how and by what means the fire originated. 
If any person so summoned does not appear, the Justice shall complete the 
panel by appointment from the by-standers, or from citizens residing in the 
vicinity of said fire. 

Sec. 2. When the panel is completed, the Justice shall administer the 
following oath: You and each of you solemnly swear that you will diligently 
examine and enquire when, how and by what means the fire which has here 
occurred was caused, and that you will return a true verdict according to 
your knowledge and such evidence as shall be laid before you ; so help you 
God. 

Sec. 3. The Justice of the Peace shall issue subpoenas for witnesses, re- 
turnable at such time and place as he therein directs. The witnesses shall 
be sworn and their testimony reduced to writing and subscribed to by them. 

Sec 4. The jury, after hearing the testimony and making all needful 
examination and inquiries, shall draw up and deliver to the justice holding 
such inquest their verdict, signed by them; or, in case of disagreement, by 
two of them, in which they shall find and certify when, how and by what 
means such fire was caused. Said finding, together with the testimony of 
the witnesses, shall be certified by the Justice of the Peace and filed with the 
clerk of the District Court of the county in which such fire originated 
within one week thereafter. 



26 



Sec. 5. For the purpose of investigation, the Justice and jury shall have 
free access to any building or property whatsoever. 

Sec. 6. If the jury shall find that any person or persons wilfully set fire to 
the property in question, or attempted to, or that reasonable cause exists for 
believing them to have been accessory thereto, unless such person or persons 
be already in custody, the Justice shall issue a warrant for the arrest of the 
person or persons so charged, and shall deliver the same to any constable in 
the county or the sheriff thereof. In such case the Justice may bind over 
the witnesses or any of them to appear at an examination of the person or 
persons so charged, at such time and place as he may direct; but nothing in 
this Act shall be construed to interfere with arrests and examinations of any 
person charged with the crime of arson as now provided by law. 

Sec 7. For the purposes of this act, the Justice of the Peace shall have 
the same power to enforce the attendance of jurors and witnesses as when 
sitting as a committing magistrate, and the verdict of the jury shall be suf- 
ficient complaint to authorize the issuance of a warrant of arrest 

Sec. 8. The compensation for holding such inquest shall be the same as 
now provided by law for coronors' inquests, and shall be audited and paid in 
like manner. 

Sec 9. This Act shall take effect from and after its passage. 

Mr. Bromwell — I move the report be accepted. 

Gen. Houghton — Your Committee would suggest that if the 
proposed ordinance were adopted by the smaller cities and large 
towns in this State or on this coast, it would materially aid ad- 
justers and agents in adjusting losses and arriving at the causes 
of fires. Under it they would be permitted to produce the tes- 
timony of any person having knowledge of the causes of any 
fire, before an officer duly authorized to enquire into such causes, 
without first making a formal complaint, charging a suspected 
party of crime. Any adjuster of large experience can call to 
mind many instances where he was morally certain the crime of 
arson had been committed, but through fear of possible failure 
to establish the fact, hesitated or declined to make the criminal 
charge which must be made before the testimony can legally be 
produced. 

Mr. Browmwell — Move this report be accepted and placed on 

file. 

Mr. Dornin— Second the motion. 
Carried. 



27 



President — Next committee to report is on Losses and Adjust- 
ments, Mr. George D. Dornin, chairman. 

REPORT OF COMMITTEE ON LOSSES AND ADJUST- 
MENTS. 

Mr. President and Gentlemen of the Association : 

Certain cases, recently brought to the notice of this body, and forming 
topics for discussion in, and outside of, the Association and the profession, 
seem to present the text, which, with your permission, shall form the subject 
of the annual report of your Committee on Adjustments. 

As stated in the Constitution, the objects of the organization are, " to pro- 
11 mote harmony and good practice among the profession; the interchange of 
" views, opinions, and personal experience, and the discussion of topics of 
" interest to the profession." 

Having these, the fundamental principles always in view, it follows that 
any discussion which brings prominently forward the various phases of 
practice in the profession we represent, and, in so far as it can, serves to 
educate one another, must result in ultimate good. 

Your committee hold, that the perfection of all knowledge in the profession 
of Underwriting is yet to be attained; experience every day teaches, that the 
unknown quantity in the problem is always before us, and that the veteran, 
as well as the neophyte has much, very much, to learn. 

The day has passed when any one can say, that he has attained the pro- 
ficiency in experience and practice, which will make his conclusions just and 
irrefutable; wq are a portion of the great business community in which the 
factors are constantly changing; the theories and the practices of twenty 
years ago, are unfitted for the times through which we are passing. The 
tremendous annual waste by fires, and their history, have so impressed busi- 
ness men, and builders, that the responsibility for imperfect architecture and 
the vicissitudes of business, have been shifted to the underwriters. So uni- 
versal is insurance, such the cheapness, and the concessions which competi- 
tion has induced, that it may be safely said that in the majority of fires, 
there is absolutely no loss to the assured. 

With such immense interests involved, where small percentages in rates, 
expenses or salvages, aggregate hundreds of thousands of dollars, can any 
one doubt the necessity of such concert of action, such improvement in 
methods as will to some extent save this tremendous waste? 

With the universality of insurance in social and business ventures, has 
come an increased moral hazard, and this has forced new conditions into the 
original form of the insurance contract, which is still full of ambiguities, 
forcing the Courts to interpret the intention of the parties. Kead the terms, 
Mr. President, of the original Hartford policy of 1794, a fac-simile of which 
hangs on the wall behind you, and compare the conditions with those of the 
revised and re-revised insurance policy of to-day. 



28 

Those were the days, Mr. President, when no middle-man of a broker or 
Local Agent dictated terms for us, nor forced us to an interpretation which 
neither party intended. 

Note the constantly changing editions of policies improved to meet the 
more recent decisions of the higher courts; go further, and read in the most 
recent Law Journals, or digest of decisions, the varied opinions of the 
Courts, crossing each other in every direction. 

To be "up" in the profession, and its worthy representatives, therefore, 
it is essential that as far as practicable, we should keep pace with these 
changes, and he is not wise who ignores the views, the opinions, and the ex- 
periences of the humblest among us. 

We do not need to go far from home to realize that something more than a 
printed tariff and a tape-line is essential to conduct an insurance company to 
success. It is human nature to rejoice, perhaps, when a company, conspi- 
cuous for its malpractices, goes into insolvency, and we eagerly gather round 
the corpse, to divide its raiment among us; nevertheless, every such failure, 
from whatever cause it may come, brings discredit in the eyes of the public 
upon the whole profession. 

We are constantly forced to recognize the community of interests which ex- 
ists among us, and that the individual good can best be attained through the 
welfare of the whole. 

The great need of the times, is a course of procedure on the part of the whole 
body of insurance men, which will make our calling respectable before the 
people. Charlatanry, back-biting, and all manner of envy have of right no 
place among us, and should receive the ban of condemnation by every one 
who respects his profession. 

Kecognizing then, that as we conduct our affairs before the community, we 
shall — individually and collectively — be respected and prospered, these asso- 
ciations for brotherly counsel, advice and information, are valuable, and should 
be encouraged by every well-wisher, whatever his rank, in the profession of 
underwriters; and, while from the nature of our organization, we cannot make 
laws and rules to govern others, we may, by interchanging of opinions, kindly- 
given, effect much good to those we represent. 

No branch of the profession is so delicate as that of the adjuster, or so 
weighted with responsibility; upon him, more than any other, devolves an 
intimacy with the laws and usages of insurance; of the laws of trade and of 
value; of mechanics, and the cost of manufacture and of production; of the 
construction of contracts, and of judicial interpretations thereof; of agents and 
their powers and duties. No other requires to the same extent the power of 
analyzation of men and their motives, to trace through effect back to cause; 
he must be affable and thoroughly discreet, suaviter in modo, fortiter in re, as 
the case may justify. 

Upon the adjuster devolves largely the reputation of his company, particu- 
larly in small neighborhoods and among the lesser communities; and he 
should use such wise discretion in conducting his case, that when his decision 
is reached, he shall be justified of men, even though it be adverse to the 
cliamant and his friends. 



29 



A blundering adjuster, who invariably acts from the standpoint that no loss 
can be a total one, and that his own reputation depends upon the amount of 
salvage he can make; who delights in counting the results of his prowess in 
this line, as the Indian the scalps of his enemies, can do more mischief for 
his company than any amount of after advertising or special cards of thanks 
can ever overcome. 

With the reputation which such men have trailed through the land, there is 
little cause for wonder that the local agent often dreads the coming of the 
adjuster, feaiing the results upon the business which he has laboriously 
built up. 

Your committee would not be considered as deprecating that laudable am- 
bition which points with pride to a skillfully conducted adjustment, or 
discomfited attempt at fraud. To bring to a successful issue, a complicated 
adjustment when all the odds are against the adjuster, is worthy of all com- 
mendation and of proper encouragement. ■• Bulldozing " a man into a settle- 
ment is no more worthy the adjuster who desires to make his calling respect- 
able, than is the lump settlements so often made without inquiry, and too 
often for temporary and local capital. 

No claim, however small, but will justify thorough investigation; no loss 
should be settled, without the same care in the details, that would be required 
in settling under a contract to build an engine, or furnish an invoice of 
merchandize. 

If the amount involved is small, the experience gained as to the cause of 
tLe loss and the effect, will frequently avoid more extensive losses in the 
future; thus we find that the most experienced companies have their own 
special adjusters, in order to utilize the information thus acquired. 

Hence the advantages to all interests, that companies should, so far as 
practicable, act together in settlement of losses. As no one adjuster embraces 
all the virtues and qualifications we have mentioned, so by comparison of 
views and opinions facts are evolved, which bring out better and more equit- 
able settlements than could be obtained by individual action. 

Your vote has already and very properly endorsed as unprofessional and 
discourteous the disposition to make capital by too swift haste to settle losses, 
where several companies are in interest and engaged in adjusting. The capital 
thus gained is ephemeral; the public has a short memory, and such favors are 
soon forgotten; and to be "bulldozed " into an unwise settlement, is as disa- 
greable and unprofessional as to bulldoze an honest claimant. Each company 
has its individual rights, and among these is the right to an honest, full ad- 
justment, and this should not be prejudiced by the acts of others in the same 
loss, who have the ultimate right to set aside the adjustment, or take other 
courses in settlement. 

The very general harmony and good fellowship which prevail among the 
field men and adjusters of the Northwest, have grown out of the recognition 
of the views as herein expressed, and this has been largely the result of the 
interchange of opinions, and of the councils of that splendui body of practical 
men, forming the Association of the Northwest. 
In concluding this paper, your committee beg to say, that in expressing the 



30 



views herein set forth, they disclaim any personal reflections, or any lack of 
sympathy for those agents and companies, who, fearing the effect of adverse 
action, and under the pressure of outside interference, are sometimes forced 
into measures which matured judgment might not approve. 

Your committee further invite the freest, fullest criticism hereon, and beg 
that no feeling of courtesy to them will prevent the expression of adverse 
views, wherever entertained. 

Applause. 

Mr. Garniss— I move that the very able report of the committee 
be accepted and placed on file. 

Seconded and carried. 

President — The next report is from the Committee on Fire 
Department and Water Supply, Mr. Nichols, chairman. 

Mr. Nichols — I am sorry to say, Mr. President, that there is 
no report made; could get no assistance, and my courage failed. 

Mr. Bromwell — Move more time be granted the committee — 
say till the next monthly meeting. 

Seconded. 

Mr. Gunnison — I wish to offer an amendment to that motion 
— to next monthly meeting, or adjourned meeting. 

Mr. Bromwell — Accept the amendment. 
Carried. 

Mr. Bigelow — I think this is a meeting that was adjourned two 
weeks ago, and business of that meeting takes precedence. 

President — Mr. Bigelow is in error. This is the regular An- 
nual Meeting of the Association, for which the By-Laws provide 
a certain order of procedure. 

Mr Bigelow — Business of last meeting takes precedence to 
anything, except regular annual business. 

Mr. Bromwell — Mr. President: This is the regular annual 
business. Would like to accomodate Mr. Bigelow by taking up 



31 

his particular pigeon here, but we must proceed with the Annual 
Meeting at once. 

President — Report of Committee on Statistics is next in order. 
Mr. A. D. Smith, chairman. 

REPORT OF COMMITTEE ON STATISTICS. 

To the Fire Underwriters* Association of the Pacific: 

In view of the notable falling off of fire business experienced by each mem- 
ber of this Association, and more especially during the past year, your com- 
mittee begs to present a few figures illustrating the growth of the fire business 
in California. 

Prior to 1871, the sworn statements filed with the Insurance Commissioner, 
upon which these statistics are based, did not segregate the marine from the 
fire business done in this Scate. 

The aggregate fire and marine premiums collected in California by 22 com- 
panies (8 California, 6 Eastern and 8 foreign) in 1868 were $2,162,701, show- 
ing an average premium income to each company of $98,304. 

In 1869, 9 California, 12 Eastern and 9 foreign — 30 companies in all — 
collected $2,635,041.86 fire and marine premiums, an average of $87,834. 

In 1870, 8 California, 15 Eastern and 10 foreign companies — 33 in all — 
collected $2,419,115 fire and marine premiums, an average of $73,306. 

Commencing, then, with 1871, we find that 24 companies (5 California, 11 
Eastern and 8 foreign) received $1,462,829 fire premiums in California, an 
average to each company of $60,951. The fire losses paid during that year 
were $1,201,612, an average of $50,067 to each company. To these figures, 
however, should be added the sum of $286,508 paid by the Pacific and 
Occidental insurance companies on account of losses incurred during the 
previous year, making the actual amount paid during that year for losses (X- 
ceed the fire premiums collected nearly $26,000. This is the most disastrous 
year on record, and we trust that the experience of future years may not rob 
1871 of its unenviable notoriety as the Black Letter year of fire business in 
California. 

In 1872, the number of companies doing a fire business had increased to 
38 — 14 more than in 1871, and including 6 California, 22 Eastern and 10 
foreign; and they collected $2,388,542 fire premiums, an increase for 1871 of 
nearly $1,000,000. This proved a profitable year to the companies interested 
the percentage of loss to premium receipts dropping from 82 in 1871 to 28 in 

1872, and helped to repair the serious inroads made upon the assets in 1871. 
This profitable field attracted the attention of still other companies, for in 

1873, 14 more aspirants for business located here, making 54 companies — 7 
local, 34 Eastern and 11 foreign — which collected $2,926,631, an average of 
$56,281 to each company, and paid $777,717 losses, an average of $14,956— a 



32 



better year than 1872; the ratio of loss to premium being reduced from 28 in 
1872 to 26% in 1873. 

In 1874, we find an accession of 16 companies, making in ail 68, composed 
of 7 local, 48 Eastern and 13 foreign companies. We find, also, an increased 
premium receipt, the amount collected being $3,139,679, an average of $46,- 
171, and with a still more favorable showing in losses in proportion to the 
business done: the amount paid being $783,303, an average of $11,519, the 
percentage falling to 25, the lowest point reached at the present date. 

In 1875, the number of companies had increased to 74 — 7 California, 50 
Eastern and 17 foreign— which collected $3,493,381, an average of $47,207, 
and paid $987,966 losses, an average of $13,350, the percentage being 28, the 
same as in 1872, and, although slightly increased over 1873 and 1874, making 
a profitable showing. 

Twelve more companies joined the little army in 1876, making 86 companies — 
7 California, 57 Eastern and 22 foreign — show an increased volume of pre- 
miums, amounting to $3,711,618, an average of $43,158. The losses, how. 
ever, increased in still greater proportion and amounted to $1,269,397, an 
average of $14,760, the percentage jumping up to 34, the highest since 1871. 

1877 opened with an addition of 3 more competitors — 7 California, 56 
Eastern and 26 foreign — in all, 89 companies: collected $3,933,920, the largest 
amount of fire premiums ever collected in California in one year, the average 
per company being $44,201. The losses show a decrease from those of the 
preceding year, the amount being $1,219,900, an average of §13,706, the per- 
centage being 31. 

In 1878 there were 91 companies — 8 California, 55 Eastern and 28 foreign — 
whose premium receipts were $3,539,522, a falling off of nearly $400,000 from 
the receipts of 1877, the average being $38,896. Fortunately the losses fell 
off in still greater proportion, the amount paid being $921,224, an average of 
$10,123, and showing a percentage of 26 — an excellent year. 

During the eight years under consideration — 1871 to 1888, inclusive — we 
find a steady and healthy growth in the premium receipts until 1878. At the 
beginning of that (1878), basing our estimates upon the records of the seven 
years, we might have looked forward to a premium income of about $4,200,- 
030; the actual receipts, however, were nearly $700,000 less than that 
amount. This noticeable falling off is attributable, we think, to the de- 
pressed condition of all business affairs that has prevailed during the past 
eighteen months. No new values have been created. Few buildings have 
been erected; the importer has countermanded his orders; the merchant has 
allowed his stock to run down; the owner of the homestead, with perhaps a 
mistaken idea of economy, has cut down the amount of his insurance, assum- 
ing a greater risk than prudence could dictate. 

From the peculiar sensitiveness of our business to the prosperous or de- 
pressed condition of all other occupations, we think that the insurance busi- 
ness might be termed the financial barometer. Activity in our business indi- 
cates activity in all. In periods of stagnation in our business, look out for 
failures and general distress. 



33 



During the gradual increase in the amount of premiums collected in the 
period mentioned, we find that the number of companies has increased in a 
much greater proportion. 

In 1871 there were 24 companies; in 1878, there were 91. The number 
doing business in each of the eight years — 1871-78 — were 24, 38, 52, 68, 74, 
86, 89 and 91 respectively. In 1871 the average premium receipts were 
$60,951, which by regular graduation decreased to $38,896 in 1878. Owing 
to this remarkable annual increase in the number of companies, we find that, 
although the gross receipts actually increased until 1878, the average receipts 
per company has fallen off over 36 per cent. In short, we find the solution 
of this rapid decline that we, as individuals, have noted in our business, in 
this increased competition. 

As to the outlook for the future. 1879 opened somewhat dismally. A 
greater decline than in 1878 threatened us. But the abundant rains of the 
past few weeks now promise a prosperous year to all, and we confidently 
hope that 1879 will foot up a large volume of premiums, and we sincerely 
trust that no serious losses may occur to detract from the profits. 

For more convenient reference, the figures above given are presented in 
tabulated form below: 

TABLE SHOWING FIRE PREMIUMS AND FIRE LOSSES IN CALI- 
FORNIA DURING THE EIGHT YEARS, 1871 TO 
1878, AVERAGES, &c. 





No 


. of Companies. 






















Fire 


Fire 


Average 


Average 


Per 












Cent. 


Yeab. 




m 

03 


o 


o 










Loss 
to 






CO 


<x> 


3 


Premiums. 


Losses. 


Premiums 


Loss. 


Pre- 




F 


P 


d 












m'rus 


1871.... 


5 


11 


8 


24 


$1,462,829 


$1,201,612 


$60,951 


$50,067 


82 


1872.... 


6 


22 


10 


38 


2,388,542 


667,704 


62,826 


17,571 


28 


1873.... 


7 


34 


11 


52 


2,926,631 


777,717 


56,281 


14,956 


26^ 


1874.... 


7 


48 


13 


68 


3,139,679 


783,303 


46,171 


11,519 


25 


1875.... 


7 


50 


17 


74 


3,493,381 


987,966 


47,207 


13,350 


28 


1876.... 


7 


57 


22 


86 


3,711,618 


1,269,397 


43,158 


14,760 


34 


1877.... 


7 


56 


26 


89 


3,933,920 


1,219,900 


44,201 


13,706 


31 


1878... 


8 


55 


28 


91 


3,539,522 


921,224 


38,896 


10,123 


26 


8 years . 









$24,596,122 


$7,828,823 

























Applause. 



Mr. Dornin — I move that the thanks of the Association be 
given for such an excellent report, made out of such dry material, 
and that the report be received and placed on file, 
o 



34 



Seconded and carried. 



President — The report of the Committee on Library is next in 
order, Mr. J. W. Kinsley, chairman. 

Secretary — Mr. President and gentlemen: In regard to the 
report of this committee, I desire to say that I saw Mr. Kinsley 
a few days ago, and he said he would have a report ready. I 
called at his office to-day, and was informed that he was at home 
sick, therefore I move the committee have more time. 

Mr. Cole — Second the motion. 
Carried. 

Mr. Gunnison — Move we suspend all other business until the 
election of officers. 

President — You hear the motion, gentlemen. 

Mr. Bigelow — I think the reports of committees are in order 

first. 

President — The report of Special Committee is in order. 

Mr. Bigelow — Mr. President: I did not expect to be here. 
Mr. Dornin has reports of Special Committee, and he will read 
them. 

Mr. Dornin — Mr. President: As representing the Chairman 
of the Committee, Mr. Bigelow, I desire to say, that this Com- 
mittee is in rather a peculiar position; there is no majority report, 
but there are three minority reports. 

Mr. Dornin reads Mr. Bigelow's report: 

To the Fire Underwriters' Association of the Pacific: 

A minority of your Committee to whom was referred the enclosed resolu- 
tion, with instructions to report on the 18th of February, begs leave to report 
that the members of said Committee are of different minds, and as the sub- 
scriber will necessarily be absent at that date, George D. Dornin, Esq., will 
assume the Chairmanship of said Committee. » 

He begs leave to submit the following as his individual views on the matter: 
That for various pertinent reasons it is recommended that said resolutions 
do not pass. 



35 



First — While admitting that the Association was formed for "the object of 
promoting harmony and good practice among the profession, and the inter- 
change of views, opinions and personal experience, and discussion of topics 
of interest to the profession, and such other topics as may be brought before 
the Association," he denies most emphatically the preamble which precedes 
said resolutions, and brands it as an attempt surreptitiously to fasten upon 
this Association a declaration that none of its members ever intended to 
assume to themselves or proclaim to the insurance world. 

He denies that it is (he office of this Association, as set forth in said pre- 
amble in substance, to hamper insurance companies in the business, or make 
rules for their practice on this Coast, or that it ever was the intention of its 
members to presume to instruct the veteran and accomplished underwriters 
governing the leading insurance companies on this coast, as to the mode in 
which their business should be conducted; and he denounces the attempt, by 
a resolution framed in an ingenious way to garble Article II of the Constitu- 
tion of this Association. 

He further suggests that until Article II of the Constitution is altered, and 
this school of young prophets are advanced beyond the freshman and sopho- 
more years, it would seem more comely and modest that they do not arrogate 
to themselves the right to dictate to insurance companies "how to protect 
their interests," or advise them as to sound practice in conducting the 
business. 

Second — That the first resolution, with its preceding preamble, condemns 
as unbusinesslike and as malpractice a time-honored and almost universal 
practice, endeared to the hearts of all progressive and national underwriters 
through this continent — a practice that has been pursued by such time- 
honored and grand old companies as the iEtna, Phoenix, Home of New York, 
and others whose names were household words in our land when many of us 
members of this Association were sucklings at our mothers' breasts, or perhaps 
only "among the things to be hoped for" — and such action would only render 
the Fire Underwriters' Association of the Pacific ridiculous in the eyes of the 
underwriting world. 

Third — Resolution second, worded as it is, has, in various forms and under 
different disguises, been presented for the approval of San Francisco under- 
writers many times during the last eighteen years. It is "Monsieur Tonson 
come again," in its present shape, and should be nailed to the counter now as a 
badpenny. No company of any standing or experience ought or would give up 
its right to settle losses in any way, at any time, and on any terms, which in 
the judgment of its managers would most conduce to its prosperity, honor, 
or benefit. 

Previous to the great fires of Chicago and Boston, the joint convention idea 
was not known. It was not given to this member of your committee to 
attend at the coroner's inquest on the remains of those great cities, neither 
was he a mourner at the obsequies of the many insurance bodies whose bones 
lie whitening around the City of Marshes and The Tri-Mountain. But as 
plague and pestilence spring from great battlefields, so noisome notions and 
evil practices and detrimental germs of disease have sprung from these great 



36 



holacausts of underwriters. It becomes such of us as are alive and well to 
place a cordon round infected districts and sternly repel the miasma that 
might blight life and health. An adjuster is made, not born. To become 
an adjuster requires studious education for long years, legal research and 
long experience in actual cases; and, after years of practice, the best and most 
accomplished can only say they know little of the cunning ways of the insured 
or the divers minds of judge and jury. Each loss is an entity, and must be 
treated by itself as circumstances arise. It is therefore preposterous to ask 
an insurance company with money, reputation and business at stake, to pledge 
in advance that they will abide by a majority vote of a convention of under- 
writers, each member of which wishes their own man should be the chosen 
adjuster, with an eye not only to the emoluments of $20 per diem, but also 
the eclat that always attends upon a successful t( cinche." In this city most 
insurance companies have their paid adjusters, or in lieu thereof, favorite 
specials. The choosing of the committee on adjustment is a matter of vote 
and combination without regard to qualification or experience, on the old 
rule of ''you tickle me and I will you." Your Committee (minority) be- 
lieves that a practice that has had a trial of eighty years, and is still main- 
tained by the older and more successful companies, ought to be good enough 
for our newer and more inexperienced fields. 

Your (minority) Committee begs leave to advise that it is a good rule to let 
each insurance company be its own judge how to adjust and pay losses that 
occur, and who shall adjust the same. There is no partnership in insurance; 
there can be none in adjustment. Let each individual case stand on its own 
merits; "each for himself " seems a far better motto to your committee 
than the famous one of Chicago, " Soc et tuum." 

Lastly, it is the earnest advise of your (minority) Committee that the scope 
of this Association be confined to instruction conference, and general enlight- 
ment, and that we strive to educate ourselves before we attempt tojinstruct our 
superiors. 

Most respectfully submitted, 

H. H. Bigelow, ex parte. 

Mr. Dornin — (After reading Mr. Bigelow's report.) Now, Mr. 
President, I have prepared a report on the resolutions, which I 
submitted to Mr. Brown for his approval and signature, but with 
singular prejudice he has preferred to stand by his original reso- 
lutions. [Laughter. | Before reading my report, I will give way 
to Mr. Brown. 

Secretary then reads Mr. Brown's report: 

To the Officers and Members of the Fire Underwriters' Association of the Pacific: 
Having been permitted to obtain a glimpse of the reports of the other two 
members of the committee to whom were referred certain resolutions presented 
at your last meeting, it becomes my painful task to differ from the recom- 
mendations of gentlemen so much my superior in age, ability, and acquire- 



37 



ments. It is particularly unpleasant to have to disagree with that venerable 
Nestor of the insurance profession, upon whose words we have so often hung 
entraced, and upon whom it is impossible to gaze without thinking of the 
appropriate words of that, if possible, still greater man, Shakespeare : 

"Oh, good old man, how well in thee appears 
The constant service of the antique world." 

But I am reluctantly compelled to deny the correctness of his facts (?), his 
deductions, and his reasoning. I assert that it has been the custom, and was 
so long before the Chicago fire, for underwriters to meet together to obtain 
concert of action upon adjustments of losses in*which a number of companies 
were interested, and that in the larger Eastern cities such has been the custom 
ever since the business of fire underwriting began to assume the huge pro- 
portions it has now attained to. It is, and has been, the invariable rule, and 
no company, or no representative of a company, would think of commencing 
an adjustment until all the companies interested had their representatives on 
hand. 

I must differ from both of my compeers in believing that the resolutions 
submitted neither dictate rules for the guidance of executive officers and man- 
agers, nor are in any way calculated to hamper any company in the legiti- 
mate transaction of its business. They are recommendations only, designed to 
express the sense of this body, and I hold that it is strictly within the scope 
and power of this organization, composed, as it is, of representatives from 
nearly every office in this city, numbering in its membership executive offi- 
cers, general agents, special agents, and adjusters, in short, almost tha entire 
body of practical educated and experienced men connected with the profession 
on this coast, to make this and similar suggestions and recommendations to 
the various officers. 

With this exception, I cordially agree with the able report of Mr. Dornin, 
bat as this exception is a most essential particular, the pith and marrow of 
the whole matter, without which the resolutions would be as the play of 
Hamlet without the prince, I refrain from uniting with Mr. D., and respectfully 
beg leave to recommend the passage of the resolutions as presented. 

Respectfully submitted, 

Edward Brown. 

Mr. Dornin reads his own report: 

To the Fire Underwriters' Association of the Pacific: 

Gentlemen — The undersigned minority of the Special Committee, to whom 
was referred the preamble and resolutions offered at the last meeting of this 
Association, begs leave to report : 

That the welfare of this Association can be best subserved by a careful rec- 
ognition of the objects for which it was organized, as expressed in Article 2 
of the Constitution, to-wit: " Article 2 — Its object shall be to promote har- 
mony and good practice among the profession; the interchange of views, 
opinions and personal experience, and the discussion of topics of interest to 
the profession, and the consideration of such subjects as may be brought be- 



38 



fore the Association.' ' That it is beyond the province of this Association to 
lay down any rules for, or hamper in any way the officers or managers of 
companies in their business methods, as upon them rests the responsibility 
for the safe conduct of their affairs. While recognizing this to the fullest ex- 
tent, we beg to submit that professional courtesy demands, and sound busi- 
ness judgment indicates, that harmony of action and uniformity in practice 
will best subserve the individual good, no less than the general interests of 
the profession of underwriters. 

That we condemn, as unprofessional and unbusinesslike, the sharp prac- 
tices which have at times been substituted for the careful and critical adjust- 
ment of losses, and by means of which the profession of the adjuster has 
been degraded and the practice of underwriting brought into disrepute before 
the community and the courts. 

That hasty settlements of losses tend to encourage incendiarism and pro- 
mote extravagent claims; hence, unless the origin of the loss and amount of 
claim are proven beyond all reasonable doubt, good policy demands that the 
company or companies in interest should not anticipate the maturity of the 
claims against them. 

That economy and the best ultimate results demand that when two or more 
companies are interested iu a loss, they should act in concert in the adjust- 
ment; that, so far as practicable, no important move affecting the rights of 
any should be made, without previous communication to all the companies in 
interest; and when adjusters, properly appointed, are acting upon a loss, if 
for any reason a company desires to withdraw, or take other means than 
those being adopted to bring about a settlement, business usage and courtesy 
demand a preliminary # notice to those interested. 

That the custom of advertising the payment of individual losses is not to be 
commended, for the reasons that, by implication, such prompt payments are 
the -exception, and not the rule of the company so advertising. That the only 
merit in this method of advertising a company lies in its antiquity; and that 
it has been tacitly abandoned by companies of the largest experience. 

Respectfully submitted. 

Geo. D. Doenin, 
Minority of Committee. 

Mr. Bigelow — Reports have now been read, and I move the 
resolutions be laid on the table. 

Mr. Garniss — Mr. President: As I understand it, these reports 
are to be taken up seriatim and passed upon. 

Mr. Dornin — Move that all these reports be received and placed 
on file. 

Mr. Smith — Second the motion. 
Carried. 



39 



Mr. Bigelow — As chairman of committee, I move Mr. Brown's 
resolution be laid on the table. 
Not seconded. 

Mr. Dornin — Let me suggest, before we get too far adrift in a 
sea of conflicting motions, that it is somewhat in accordance with 
parliamentary usages, to dispose of a minority report first, after 
it has been made the property of the body by its acceptance. 
Now, in this case, we are met with the dilemma as to which is 
the minority. To determine this, it seems to me proper that we 
ascertain which two of the reports run most in harmony. It is 
apparent that there is no great divergence of views between Mr. 
Brown's report and mine; this being the case, they may be con- 
sidered as of the majority. Mr. Bigelow's report being adverse 
to the resolutions in every particular, may properly be considered 
as a minority report, and may properly be disposed of first; then 
the motions upon the others will come in regular order. 

President — In order to expedite business, you will please act 
on Mr. Bigelow's report. 

Mr. Bromwell — Move Mr. Brown's report be accepted as the 
sense of this meeting. 
Seconded. 

Mr. Gunnison — Move Mr. Dornin's report be accepted as the 
further sense of this Association. 

Mr. Bromwell — Second it. 

Mr. Kinne — I would like to inquire of the Secretary whether 
these two reports contradict each other, or whether they conflict 
in any essential point — whether they are alike, or is one an ar- 
gument in favor of certain resolutions, and the other against it. 
I would ask Mr. Dornin if these reports conflict; if so, we ought 
to know it. Gentlemen, let us not be foolish, but understand 
fully what we are talking about. 

Mr. Dornin — I have not read Mr. Brown's report. 

Mr. Brown — There is only one material point of difference, and 
that is a very material one. Mine recommends the passage of 



40 



the resolutions, and Mr. Dornin's does not recommend them, for 
the reason that he believes they will tend to lay down rules which 
it is not within the power of this body to do, and may possibly 
hamper some company in the settlement of losses in the future. 
Now, I will read the resolutions again, and I think every one 
will be convinced that there is nothing in them to hamper a 
company, simply a recommendation to companies: 

" This Association was created for mutual information of its members, for 
the protection of the interests of the companies to which they are attached, 
for the advancement of harmony, and sound practice in the transaction of the 
business of fire insurance on this coast. The Association has heard with un- 
feigned regret and pain of certain departures on the part of several of its 
members from those principles of business practice which it has been en- 
deavoring to foster and encourage; therefore, be it 

"Resolved, That this Association condemns in the strongest measure all 
attempts on the part of any company or companies to attract attention and to 
curry popular favor by undue and hasty settlements of losses. 

"Resolved, That this body urgently recommends to companies , general 
agents, that they shall, whenever two or more companies are interested in a 
loss, adjust such loss in unison, and that no company shall proceed to settle 
the claim against it until all those items covered by its policy, in which other 
companies are interested, have been fully and finally adjusted; and that 
whenever companies enter conjointly into an adjustment and appraisement, 
they shall not recede from such adjustment and appraisal without submitting 
the matter to all the companies interested, and on the affirmative vote of a 
majority of said companies." 

Mr. Bigelow — I would like to know what question he is speak- 
ing to? 

President — The adoption of Mr. Dornin's report. 

Mr. Brown — I was saying, gentlemen, that these resolutions 
do not hamper any company, but simply recommend a line of 
conduct to be pursued in the adjustment of losses. 

Mr. Dornin — It will be seen, from what Mr. Brown has said, 
that no material difference exists between the two reports. My 
objection to'the resolutions lies mainly in the phraseology of the 
first portion, and in making my report I had in view to allay any 
possible antagonism between ihe officers and managers of com- 
panies who are not our fellow-members and this Association. 
There are many such who wish the Association well, but take no 



41 

active part in it. I think there is a great future of usefulness in 
this Association, and we should be careful not to antagonize any 
element, by arrogating to ourselves, even by implication, the 
power to make rules to govern companies doing business here. 
I would like to say here that I have no feeling in the matter, but 
hope the Association will act harmoniously in its disposition of 
the reports. 

Mr. Kinne — Move that the resolutions be laid on the table. 
Mr. Spencer — Second the motion. 

Mr. Gunnison — Move Mr. Dornin's report be accepted as fur- 
ther sense of this meeting. 

Seconded and carried. 

Mr. Garniss — As there is no majority report, I would make a 
motion that Mr. Brown's and Mr. Dornin's reports be received 
as a majority report and expressing the views of this meeting. 

Seconded and carried. 

Mr. Bigelow — Mr. President: Will you allow me to withdraw 
my report? 

Mr. Brown — Mr. President: I do not think it is proper to per- 
mit Mr. Bigelow to withdraw his report. 

Mr. Hawes — Quite agree with Mr. Brown that whenever re- 
ports are made, parties should not be allowed to withdraw. 
Would like to have the report of Mr. Bigelow kept here for ref- 
erence. 

Mr. Bigelow — I will now withdraw my motion and substitute 
another. I will now ask to have the papers printed as my opin- 
ion. 

Mr. Gunnison — Move we adjourn until next Tuesday (20th), 
at 8 o'clock. 

Seconded and adjourned. 



42 

The Association met pursuant to adjournment, on the 20th day 
of February, 1879, at 8 o'clock a. m. 

A. P. Flint, Esq., President, in the chair. 

Present — Messrs. A. P. Flint, L. L. Bromwell, A. D. Smith, 
A. R. Gunnison, Geo. D. Dornin, C. T. Hopkins, W. L. Chal- 
mers, C. M. Kinne, J. C. Jennings, Geo. E. Butler, W. B. Bur- 
tis, and J. W. Staples. 

President — The reading of the minutes is next in order. 

Secretary — The reporter has not furnished me with the report 
of the last meeting, and I will have to ask the postponement of 
the reading. 

Mr. Kinne — I move that the reading of the minutes of the last 
meeting (annual, held 18th) be postponed until the next monthly 
meeting. 

Seconded and carried. 

Letter from Mr. Geo. W. Hayes, Secretary of the Fire Under- 
writers' Association of the Northwest, was read from the Secre- 
tary's desk. 

Mr. Bromwell — I move the letter be received and placed on 
file. 

Seconded and carried. 

Mr. Bromwell — I move that the Secretary be requested to make 
a suitable reply to Mr. Hayes for his kind words. 
Seconded and carried. 

Letter from Mr. C. R. Story, tendering his resignation. 
On motion, was accepted. 

Secretary called attention to the fact of Messrs. J. W. Hart, J. 
W. Kinsley, Dave Rorick,* and E. D. Wright having retired 

* Rescinded by following resolution, passed March 25, 1879: 

Resolved, That so much of the motion passed at the meeting held February 20th, apply- 
ing to Mr. Dave Rorick, is hereby abrogated, and that Mr. Dave Rorick be and is now re- 
stored to membership as if no such action had taken place, and that the Secretary notify 
Mr. Dave Rorick of his restoration to membership. 



43 

from the insurance profession and asked the pleasure of the As- 
sociation in regard thereto. 

Mr. Kinne — I move that the withdrawal of those members 
from the insurance profession be taken as evidence of the desire 
on their part to resign from membership with this Association, 
and that their resignations be accepted. 

Seconded and carried. 

Mr. Bromwell — In the Association of the Northwest, they have 
a repository for the collection of material and interesting sub- 
jects, not properly belonging to any committee, which is called 
tl The Omnibus." I think it would be well if we were to start a 
similar receptacle for this Association, to be called the "Califor- 
nia Knapsack." 

Col. Kinne — I am happy, as a soldier, to second so worthy an 
object as a knapsack under any circumstances, and hope the 
same will be well patronized. 

Carried. 

Mr. Bromwell — I move that the Secretary deposit a voucher 
with the Treasurer for fifty dollars for services the past year. 
Seconded and carried. 

Report of Committee on Library was read from the Secretary's 
desk. 

REPORT OF COMMITTEE ON LIBRARY. 

To the President and Members of the 

Fire Underwriters' Association of the Pacific: 

The duty of getting up a report on "Library ,: devolves upon the youngest 
member of the committee, who, up to this moment, supposed the Chairman, 
Mr. Kinsley, (who, being an editor, is expected to be up in making reports, 
and to whom the getting ready a dish of this kind before breakfast is a pas- 
time) would make a very able report and one commensurate with the sub- 
ject. It seems, however, that Mr. Kinsley is sick, and his physician has pos- 
itively forbidden him to use his pen. Mr. Spencer, another of the commit- 
tee, is out of town, and therefore on me devolves the onerous duty to present 
a report, hastily compiled and therefore necessarily brief. 

Your committee beg to call your attention to the book-case, in answer to 



44 



the query, " How is the Library?'' It will speak volumes for itself, and, as a 
Law dispenser, can furnish all the recent decisions. 

The " Monitor " can silence all questions of dispute, and we can always be 
said to be up with the " Times," and while we, on this " Coast Review " all 
that goes on, we can hardly be said to be a disinterested " Spectator." 

We herewith submit a list showing the contents of our book-case at the 
present time : 

BOUND VOLUMES. 

Coast Review, Vols. 2-3, 4-5, 6-7, 8-9, 10, 11, 12, 13. 

Codes and Statutes of California (2 vols.), Theo. H. Hittell. Vol. 1 — Con 
stitution, Political Code, Civil Code. Vol. 2 — Civil Procedure, Penal Code* 
Statutes. 

(Commentaries on Agency and Agents (1 vol.), Wharton. 

Digest of Fire Insurance Decisions (1 vol.), Littleton & Blatchley. 3d edi- 
tion, Clement Bates. 

Digest of the Law of Fire Insurance (1 vol.), Oliver B. Sansum. 

Fires; their Causes, Prevention and Extinction; combining, also, a Guide 
to Agents (1 vol.), F. C. Moore. 

Fire Insurance Cases (4 vols.), Edmund H. Bennett. Vol. 1 — Cases from 
1729 to 1839. Vol. 2— Cases from 1840 to 1849. Vol. 3— Cases from 1849 to 
1854. Vol. 4— Cases from 1855 to 1865. 

Fire Underwriters' Text-Book (1 vol.), J. Griswold. 

Flanders on Fire Insurance (1 vol ). 

Insurance Times, Vols. 10 and li. 

May on Insurance (1 vol.), Fire, Life, Accident-Guarantee, etc. 

Monitor, Vols. 25 and 26. 

Municipal Beports (4 vols.), 1874-5, 1875-6, 1876-7, 1877-8. 

Proceedings of the Fire Underwriters' Association of the Northwest (2 vols.), 
1875-6 and 1878. 

The Insurance Law Journal (7 vols.). 

PAMPHLETS. 

Address— J. B. Bennett, Esq., before the Association of the Northwest, 
Sept. 27th, 1876. 

Address — J. S. Blackwelder, Esq., President Association of the Northwest, 
Sept. 18th, 1878. 

Annual Keport Chief Engineer San Francisco Fire Department, year end- 
ing June 30th, 1878. 

Annual Report Fire Marshal Durkee for year ending June 30th, 1878. 

Annual Reports San Francisco Fire Patrol, 1876, 1877 and 1878. 

" General Orders," being a compilation of the ordinances now in force in 
the City of San Francisco. 

The following rule was passed by the Association at the meeting held 
December 17th, 1878, viz: 



45 



11 Resolved, That the Secretary be empowered to loan to members of this 
Association any book or pamphlet contained in the Library, for a period not 
to exceed one week at any one time, taking a receipt therefor." 

While nothing in the resolution so provides, yet we suppose it is intended 
to abrogate the following rule, passed May 15th, 1877: 

" No books belonging to this Association shall be removed from the library 
room under any circumstances, except for use in Court, and only then upon 
giving a written receipt to the Secretary therefor." 

Would it not be well to put a motion to that effect, and we shall have the 
wishes of the Association well denned? 

In the matter of "Library," will not some of the members take the trouble 
to suggest to our successors, the next " Committee on Library," any valuable 
works on insurance. We have plenty of room in our spacious book-case, and 
when called upon we ought to be able to produce all the law and reference 
books extant, bearing on fire insurance. 

Donations to our library are like a motion to adjourn, always in order. 

A suggestion and I will close: Would it not he a fitting tribute to the 
"Boards of Fire and Marine Underwriters of San Francisco," for their 
courtesy in according to us the free use of their room for our meetings and a 
repository for our Library, to tender to them the free use of the volumes 
therein contained, under the same restrictions as govern ourselves? 

Begging you to excuse the brevity of what ought to be a long report, I 
desire to remain, 

Kespectfully yours, 

L. Beck, 
Of Committee on Library. 

Mr. Chalmers — I move the report be received and placed on 
file. 

Mr. Bromwell — I move "that a special committee of three be 
appointed by the Chair to carry out the suggestions contained in 
the report of the Committee on Library. 

Seconded and carried. 

Mr. Smith — I move that a committee, to consist of Messrs. 
Edwards, Dornin and Bromwell, be appointed to carry out the 
suggestions contained in the President's address. 

Seconded and carried. 

President — The report of Committee on Fire Department and 
Water Supply, Mr. Nichols, chairman, is now in order. 

Mr. Nichols — Mr. President: I have not had the time to 
arrange anything in the shape of a report since the last meeting 



46 

(18th), and shall have to ask for more time, or to be excused 
from the report entirely. 

Mr. Smith — I move that Mr. Nichols have until the next 
monthly meeting to complete his report. 

Seconded and carried. 

Mr. Gunnison — Mr. President: I move the suspension of the 
rules, and that the name of Mr. C. T. Hopkins be placed in 
nomination for President of this Association for the ensuing 
year, and that the Secretary be directed to cast the vote. 

Seconded and carried. 

The Secretary cast the vote for Mr. C. T. Hopkins. 

President — Gentlemen: I take pleasure in announcing that 
Mr. C. T. Hopkins is elected unanimously as President of this 
Association for the ensuing year. 

Mr. Bromwell — I take pleasure in placing the name of A. D. 
Smith in nomination for Vice-President, and that the Secretary 
be directed to cast the vote. 

Seconded and carried. 

The Secretary cast the vote for A. D. Smith. 

President — Gentlemen* I take pleasure in announcing that 
Mr. A. D. Smith is unanimously elected Vice-President of this 
Association for the ensuing year. 

Mr. Bromwell — I want to place in nomination for the offices 
of Secretary and Treasurer the name of the present incumbent, 
Mr. J. W. Staples, and move that under a suspension of the 
rules the vote be taken standing. 

Seconded by Kinne, and carried. 

Vote taken standing. 

President — Gentlemen: I take pleasure in saying that you 
have unanimously elected Mr. James W. Staples to the offices 



47 



of Secretary and Treasurer of this Association for the ensuing 
year. 

Secretary — Mr. President and gentlemen: [Call for speech.] 
I am too modest to make a speech, but rose to thank you for 
the marked appreciation of my services, and to say that in the 
future as in the past my efforts will be how best I can serve the 
interests of the Association. 

Applause. 

On motion, adjourned. 



The report of Committee on Fire and Water Supply was read 
at the meeting held June 17th, 1879. 

EEPOET. 

Mr. President and Gentlemen of the Association: 

In presenting this report your Committee regret that its preparation had 
not been placed in more competent hands. A statistical report of the Fire 
Department, available Water Supply, etc., of the cities and towns of this 
Coast was contemplated by this Committee, but the difficulty of obtaining 
new facts of value, and the meagreness of the information at present at our 
command has caused us to relinquish the plan for this report. 

In this connection we would beg to suggest to the members of this Associa- 
tion, whose duties call them to so many different points on this Coast during 
the year, that informal reports, on the subjects that should be treated by this 
Committee, relating to the various places coming under their observation, if 
handed to the Secretary from time to time, would be of great value to our 
successors in preparing their report for the current year as well as to the 
Association at large. Information as to Apparatus, Cisterns, Hydrants, Sup- 
ply of Water claimed, and items of that nature may of course always be ob- 
tained from those in charge of the departments. But beyond this it is desir- 
able to be informed as to the efficiency and discipline of the members of the 
department. The state of repair and order in which Machines, Hose, and 
all apparatus is kept, if Hydrants (when used) are in condition for instant 
service, etc. And those facts can only be reached by some interested person, 
not connected with the departments reported on. The exhaustive report of 
the Chief Engineer of San Francisco Fire Department, which has probably 
been perused by the members of this Association, makes it unnecessary for 
your Committee to enlarge upon its statistics, etc. We would, however, con- 



48 



gratulate the insurance fraternity, as well as property holders generally, on 
the efficient addition to the apparatus of the Department in the shape of the 
steam tug Governor Irwin, with its auxiliary fire pumps and attachments, 
filling as it does a long felt need for the protection of the water front and the 
section adjaceut thereto of this City. The department of Oakland, onr 
nearest neighbor, is effective as far as its limited capacity will permit. That 
city, spreading over a large extent of territory not less than three miles square, 
and with what might be an ample supply of water if properly distributed, 
looks for protection to a department composed and supplied as follows, viz.: 
Number of members, including officers, 53; of which two drivers for each 
engine alone are required to give all their time to their duties — engineers and 
all others attached to the force merely responding to alarms. The apparatus 
consists of three second-class and one third-class steamers with hose carts. 
One Hose Carriage, one Hayes' Truck with 75 feet extension ladder, one 
Hook and Ladder Truck, 3,400 feet good rubber Hose. There are 148 Hy- 
drants in excellent condition, and a number of Cisterns connected with the 
water mains; 22 fire alarm boxes and 10 additional ones to be put up imme- 
diately. To place this department on an efficient footing, there should be an 
increase of at least two steamers with 2,000 feet of new hose. Steam circu- 
lating heaters should be connected with all the engines, and many minor im- 
provements might be suggested in addition, and the number of Hydrants and 
Alarm Boxes should be largely increased. Trusting the needs of this par- 
ticular department may be filled without delay, and thanking the Association 
for the consideration shown this Committee, we beg to leave the subject to 
the consideration of our able successors. 

CM. Nichols, 
Oliver Hawes, 
Sam'l O. Hunt. 



By order of the FIRE UNDERWRITERS' ASSOCIATION OF THE PACIFIC, 
is given to the memory of our esteemed associate and friend, 

|l)UHam; jf* Jptotltlart, 



Who was born in Farney Hill, Scot/and, July 15, 1831, 
And who died in San Francisco, June 7th, 1878, 



He was engaged in the profession of Underwriting for ten years, and at the 
time of his decease was Agent for the 

lltw tyork Wnbenurtters 1 Agency 

iSlanljattan iFire Insurance (ttompamj of itleru K)ork, 

Jtyetttr insurance Compantj of jBrookhjn, 

ant) $)ome Insurance Ccanpamj of Wenmrk, Kl 3L 

He was a Member of the 

£m ^ntfmwitm' ^sanation af tfoe f arific 

at the time of his death. 



I 



fyiU! 



If 



H jftett|0t|tam, 



By order of the FIRE UNDERWRITERS' ASSOCIATION OF THE PACIFIC, this page 
is given to the memory of our esteemed associate and friend, 

lletttg |tal£er, 

ftotn in Hamburg, September 20, 1845, 
ilnb bzceazzlj in SSan tfxancizco, 3lprtl 6, 1879, 



©tje firm of ^enrij #al?er $ (Eo. mere successors to ttje firm 
of Beil, $erttjean & ffio. (king composeb of jStess. ©us. Beil, 
(ft. $erttjeau, father of ttje surmoing partner of tfjre firm 4t)enrij 
iBaljer & Co., anb C 31. iBaljer, fattjer of ^enrij iSaijer). ®tje 
firm began in 1849, in tlje commission anb shipping business, 
anb in 1873 abbeb ttje Insurance department to ttje same, 
taking ttje agencxj of tlje Broiler lanb jMarme insurance (fto.; in 
1874 ttje Soea £\xz insurance Co. mas abbeb, anb in 1874 ttje 
Soea anb Mortij ©erman combineb, anb later mas ah'bz'b ttje 
^eloetia, Jlero ^ork Wnberroriters' 3lgenctj, jMantjattan, anb troo 
fftartne Companies mere abbeb to ttje agenctj, 

£fie 3nsuraiuc profession lost a toarm fricnb in tfit bcatft of Mi. 
Bal^r. QLut off in tjje ftoboer of fits poutfi to* Utl tfie loss fecenlp. 



JjwwdJ, l\ittil ftuni mi uttmt^l 



49 



OFFICERS FOR 1879. 

C. T. HOPKINS President. 

A. D. SMITH Vice-President. 

J. W. STAPLES Secretary and Treasurer. 

Executive Committee. 
A. P. Flint, Wm. Macdonald, A. K. Gunnison. 

Standing Committees for 1879 . 

LOCAL AGENTS. 
Geo. W. Spencer, Geo. F. Grant, H. W. Snow. 

FORMS OF POLICIES. 
E. E. Potter, J. D. Bailey, T. A. Mitchell. 

LOSSES AND ADJUSTMENTS. 
Wm. Macdonald, P. Outcalt, Wm. Sexton. 

LEGISLATION AND TAXATION. 
Geo. D. Dornin, Chas. D. Haven, E. Brown. 

FIRE DEPARTMENT AND WATER SUPPLY. 
A. P. Flint, W. N. Olmsted, C. W. Nichols. 

STATISTICS. 
E. W. Carpenter, Louis Mel, W. P. Thomas. 

LIBRARY. 
0. H. Cole, J. C. Jennings, W. J. Landers. 

CALIFORNIA KNAPSACK. 
Col. C. Mason Kinne, Manager. Wm. Macdonald. 

4 



PROCEEDINGS 



OF THE 



FOURTH ANNUAL MEETING 



OF THE 



FIRE UNDERWRITERS' ASSOCIATION 

OF THE PACIFIC. 



The Association held its fourth annual meeting on the 17th day 
of February, 1880, at their rooms in this city, Mr. C. T. Hop- 
kins, President, in the chair. A full attendance was present. 

The meeting -was called to order, and, in the absence of Mr. 
J. W. Staples, the Secretary, Mr. Geo. W. Spencer was appointed 
Secretary pro tern. After calling the roll and reading the 
minutes of the last meeting, which were confirmed, he read the 
annual report of the Treasurer: 

Fire Underwriters' Association of the Pacific, in account with J. W. Staples, 

Treasurer. 
1879. Dr. 

Feb. 18. Balance on hand and in Bank $ 107 33 

Keceived for dues and fees 157 50 

$264 83 
1879. Cr. 

Feb. 26. Paid F. H. Lombard, Keporter . . .$10 00 

" ■■ " J. W. Staples, Secretary 50 00 

May 26. " H. S. Crocker, bill printing 4 50 

■■ P. O. Money Order, Spectator 190 

July 28. " H. S. Crocker 2 00 

Sept. 15. " D. Hicks & Co., binding books 6 00 

Nov. 13. ■' H. S. Crocker & Co , printing 2 00 

Feb. 9, 1880. " " ■■ " 7 50 

Balance 180 93 

$264 83 



51 



Cash in Bank $87 03 

" on hand 93 90 



$180 93 
J. W. Staples, Treasurer. 
E. & 0. E. 

After which, Mr. Geo. W. Spencer read the following report, 
as Chairman of the Committee on Local Agents: 

ADDRESS. 

Mr. President and Gentlemen of the Underwriters' Association of the Pacific: 

The leading fire insurance companies throughout the world, with few, if 
any exceptions, have attained their strength and reputation from the adoption 
of the agency system. 

It is true that in many large cities there are companies transacting purely a 
local business, whose policies to-day are accepted without hesitation, as 
affording protection in the event of fire losses. They are managed conserv- 
atively, with care and economy; and the result of such management has been 
gratifying to stockholders and swelled their assets to respectable proportions. 

But the arguments against the purely local system of fire underwriting are 
so sound and numerous, and within the past decade, such convincing proofs 
have been furnished the public of its weakness and dangers, that between it 
and the one of general agencies, there can be but one opinion in the minds of 
those who have given the subject thoughtful consideration. Admitting, then, 
that the establishment of a general system of agencies is not only advisable, 
but necessary to the permanent success of any company; and, as most of 
the members of this association are connected with offices transacting a bus- 
iness of this character, the subject of local agents is of such importance that 
it cannot fail to enlist your attention. 

You have had this question most ably treated by the committees that have 
reported at our past annual meetings. The report submitted last year fairly 
bristled with facts and suggestions of the greatest value; and your present 
committee has no hope of furnishing a paper that will stand the test of com- 
parison with it. But the subject of local agents is a broad one. It can be 
made to embrace almost every ph ise of the insurance question, and we 
therefore avail ourselves of this opportunity to respectfully direct your atten- 
tion to such points as have come within our observation and experience, and 
seek your aid in endeavoring to check the abuses that have grown up in the 
profession, to the advancement of which this Association is pledged. 

Local agents are among, if not the most important adjuncts of an insurance 
company. Through them we derive our business or resources; and, as upon 
the quality and quantity of such resources our success is determined, the 
question of appointing, instructing, and protecting agents is one that comes 
home to us all. 

In the not distant past, when the requirements of those desiring insurance 



52 



were nearly as great and not so amply supplied as at the present time; when 
the comparatively few companies represented in the " Pacific Department " 
reaped their harvest of premiums and losses by their own sweet selves; when, 
in fact, there were enough agents to go round and it was not necessary to 
divide one into sixteenths and thirty-seconds to obtain a representative, it was 
customary for a special to appoint an agent, whose services were retained 
solely for his company, and such appointments were "respected accordingly 
by his brother specials." Good men for agents were then available; not that 
they were more plentiful than now, but the demand was not so great. 

Throughout the interior towns, the modest tin signs simply reminded the 
passer-by that insurance could be had within. To-day, buildings and fences 
are decorated with advertisements of the agency in brilliantly colored pictures, 
and distorted letters, announcing that the agents are in force and the com- 
panies prepared for war. 

This increased competition and demand for business could have but one 
result. The supply of eligible men for agents became exhausted, and, there- 
fore, as one developed a fitness for the position and made it a success, it was 
natural that he should be tendered the agency of other companies. Instead 
of representing but one, he became the agent of two or more companies, and 
so on, until his list was full, or the side of his building could hold no more 
chromos. 

Such of us as have been and are engaged in field work, know the difficulty 
encountered in selecting an agent, in any of the desirable cities and towns in 
this department. But such difficulty may be overcome, if we but devote suffi- 
cient time to the purpose, and as specials are efficient and have the welfare 
of our company at heart. 

In this matter of appointing and instructing agents, do we fully realize the 
importance and responsibility of our positions ? Do we feel that from us 
are demanded results, that, unless we are devoted to our profession and alive 
to the requirements expected of us, will not be accomplished ? 

Do we give the time and attention to the necessary details of agency work, 
acquiring and imparting information, valuable alike to the agent, the company 
we represent, and ourselves ? Let such questions be truly answered, and we 
believe, that each of us will determine, that, if progress and reform are re- 
quired, they must commence with us, individually. It is not sufficient that 
we simply define the position of an agent, state minutely at our annual 
meetings what his duties are, also what they are not and why; declare, as a 
matter of general fact, that virtue is its own reward; receive the applause of 
listening friends and plume ourselves on having done our whole duty. No, 
gentlemen, this is not enough, we must practice as well as preach, and show 
by fulfillment that our advice is not pretentious, nor our demand for reform 
a sham. 

In appointing an agent, take time to carefully make your selection, and 
instruct him in the duties of his position. 

Were we seeking an agent for any other business — a person to represent 
us, attend to our interest and handle our funds, would we drop off of a freight 
train, at some way station, take a hasty view of the place, find some one, 



53 



perhaps, acting for others in the same line of business, and after a few gen- 
eral instructions, give him the appointment and depart on the next passing 
train ? On the contrary, we would take ample time to canvass the field 
thoroughly, until we found the man that we required, and then instruct him 
minutely in his duties. The fact is, we do not take the high and lofty stand 
that we should in our profession. We do not fully consider the fact that we 
are entrusting to another the honor, the integrity, the good name of the com- 
pany we hold dear; and fail to impress upon him that the position is one of 
trust — a calling, by which he may make an enviable reputation as well as 
profit. 

Gentlemen Special Agents, you are not commercial travelers, selling wares. 
Your popularity does not depend upon a hard head for stimulants, or a free 
hand with expense funds. You are gentlemen, representing a dignified pro- 
fession. Your association, from the very nature of things, should be sweet 
and clean. 

At home, at your offices, in the field and in your reports, this is necessa- 
rily a recognized fact. Being so, let the agent whom you appoint be of a 
similar class. By slow degrees, purify the local agencies. Take no part 
yourself in local quarrels and jealousies between agents, and discourage them 
in others. Your calling is an honorable one, and it is beneath your dignity 
to become a partisan. Let your standard be a high one, and your appoint- 
ments reflect credit alike on your judgment and associations. 

Why do we place our interests in the care of one whom we regard in the 
light of an experiment? He will perhaps rise to the full height of our hopes, 
but in many instances, in small towns, almost always proves a dead failure. 
Why appoint men whose character or calling is such that were he not your 
agent, you would neither seek nor admit of his acquaintance. Find a repu- 
table person, whose name is a guarantee that his acts will cause you no 
shame. If you can interest him in the work, appoint him. A good man 
makes a good agent; an intelligent man, an intelligent agent; a superior man, 
a superior agent; and, per contra, a weak, cunning, dishonest or confidence 
man, a correspondingly undesirable agent. 

Traits of character in men govern their acts as agents. Each after his own 
kind has already, in the community where he resides, produced effects. It is 
therefore a study of character for the specials, a study from nature. Beware 
of the stranger applicant for position of local agents. He is generally a sol- 
dier of fortune. 

In the matter of the instruction of agents, the question affects the extent of 
our information and the ability to impart it to another. An agent is a man 
like other men. For the purpose of insurance, he is what we make him. 
Presuming, at the start, that the tutor knows more of the subject of his les- 
son than the pupil, the latter will reflect and reproduce the instructions of the 
former. Perhaps the pupil, having the stronger mind and larger capacity, 
will eclipse and leave behind his teacher, in time becoming himself a teacher. 
How important, then, that the original training should be sound and reliable. 
Lessons once learned, whether good or bad, are not readily forgotten; and the 
agent, instructed in a careless or faulty school, will certainly inculcate in 
others the errors that have been taught him. 



54 



We fail of our duty in regarding the agent simply as a solicitor, whose ad- 
vice or opinion is not questioned or called for. It is not enough to put him 
in the way of forwarding applications which take their usual course and are 
accepted or rejected at head-quarters. He should be taught his responsibil- 
ity, and by visits, conversation and correspondence, made to know more of 
the business, and interested in it. Is there a company that has not suffered 
from the acts of an ignorant or careless agent? 

Who of us has not been asked the question by agents, representing some of 
our leading companies, whether the value of property saved from a fire, not- 
withstanding the amount of loss, was not always deducted from the face of 
the policy? The inability of an agent to answer correctly such a question 
from the assured, has doubtless caused many of our companies an increased 
measure of loss. A large number of agents that we have met with are liter- 
ally without instructions of any kind. The companies appointing them have 
simply furnished a commission of authority and book of rates. With these 
the agent is considered to be fully armed and equipped, and expected to trans- 
act a business that requires a knowledge of many details, and calls for both 
discretion and ability. We know of a case where nine-tenths of an agent's 
income is derived from insurance commissions. The tenth part is afforded 
by a business which he nurses with care and attention, while the more impor- 
tant and larger industry is shamefully mismanaged. He is not to be cen- 
sured as much as the specials who appointed him and failed to interest him 
in the importance of his work. 

We are not only brought in contact with ignorance, but have to combat bad 
practice and wrong ideas taught by those in authority. Our opinion was 
asked, under what head the bottles of a drug store should be insured? Upon 
replying under the head of furniture, it was met with derision and scorn and 
a letter from a manager (?) produced, stating that " Bottles of a drug store 
are always included under the head of stock, and never appear under that of 
furniture or fixtures." But we have dwelt too long, perhaps, on this part of 
our subject; for your experience, whatever your position in the business, 
must have convinced you that much is lacking in the proper instructions 
given to agents. Managers and specials have neglected a plain duty, and we 
trust increased effoits will be made in the direction of improvement. In con- 
clusion, your committee would particularly direct your attention to the pro- 
tection of agents from bribery and the advances made them in the interest of 
another company. We all know what this means, for there is hardly a com- 
pany represented at this meeting that has not some grievance of this nature 
to complain of. The payment of increased commission, for the purpose of 
obtaining a larger share of an agent's business, is an evil that is spreading, 
and threatens more permanent injury to the insurance business on this coast 
than any that has come under our observation. It is more injurious in its 
effects than would be the suspension of rates and a general scramble for bus- 
iness, for that would run its course and be re-adjusted. 

Gentlemen, the advantage derived by your company from such arrange- 
ments, is of short duration. ^Retaliation has already commenced, on the part 
of those who have suffered from this species of robbery; and self-preservation, 



55 



the first law of nature, will soon bring so many bn the same plane with your- 
selves as to deprive you of your monopoly of this business. 

What will you do? Take a new departure and raise the price? Some have 
done so already, and we know of rates of commissions being paid that net the 
agents more profit than the company can hope to get from the business. 

Increased commissions enable an agent to divide with the assured, thus 
adding another demoraliziug feature to the business, and educating a new 
class of claimants whose demands you must meet in the future. We fully 
realize the danger and demoralization coming upon us, and yet do nothing to 
check it. This Association is in a better position to take up this question 
and reform the abuse than any other organization. You make the appoint- 
ments of and contracts with agents. In your hands, as specials, the matter 
of commission is left, and your reports are accepted and indorsed by the com- 
panies ycu represent. 

Will you take the matter in hand and throttle it now, while it is in your 
power, or will you see the evil spread until it is too great to reform and im- 
possible to regain your present position. We should be glad to see the power 
of this Association for good developed and strengthened. It needs but con- 
certed action to bring about such a result. 

Applause. 

On motion, ordered received and placed on file. 

The report of the Committee on Forms of Policies being then 
in order, it was called for by the President, and read by Mr. 
Potter of that committee, as follows: 

E. E. POTTER'S ADDEESS ON FORMS AND POLICIES. 

Mr. President and Members of the Association: 

As Chairman of the Committee on Forms of Policies, I must confess that I 
am a victim of the retaliatory system and take my medicine like a little man. 
I did not suppose that because the chairman of this committee last year had 
to make a minority report, that I would have to do likewise this year. Only 
yesterday did I learn of the fact. To say that I have given the matter no 
thought previous to that time would be only uttering the truth. My only 
hope now is that the short-hand reporter will kindly pass me by. 

In the first place, touching the written portion of the policy, I do not pro- 
fess to be able to make any suggestions of improvement to most of you, who 
are older and probably abler underwriters than I, but for the benefit of those 
present who may not have given this matter so much attention, I will give a 
few hints. 

We all have to admit, in writing a policy, the first and most important 
thing to do is to divide the face of the policy in specific amounts as far as 
practicable. I have, however, noticed that many of our oldest underwriters 



50 



have grown cold in the business and have adopted the "Blanket," and in 
many cases when I think it has been unnecessary. 

Probably the most glaring of these is writing on household furniture and 
family wearing apparel. 

I have never found but a very few exceptions when the assured objected to 
having the two items segregated. We know how easy it is for dishonest par- 
ties to exhaust the face of the policy on two or three silk dresses, when the 
furniture has been saved. We can all probably quote instances of this kind. 

I notice a habit of leaving out the pronoun and commencing the policy, for 
instance, $1,000 on household furniture, or on building, instead of using the 
words his, her or their, and while the printed condition provides that the 
ownership shall be sole and unconditional, the written portion takes prece- 
dence, and often leads to disagreement between even the oldest adjuster and 
the assured. 

Another word that has seemed superfluous is the word "unmanufactured;" 
a boot or shoe unmanufactured might mean a calt before it is killed. I would 
make another suggestion, although some of us have probably already adopted 
it. (I have it in the printed conditions of my policy.) It is to insert after 
the description of the property the word "while," making the policy read 
(for instance) on his horses and buggies while contained in his two-story frame 
barn, as it has been held that companies are liable for loss on such property 
wherever it may be, that the words "contained in" were used merely to show 
that those were the horses, etc., to be insured. 

I have found many times among my country agents a wrong interpretation 
of the word "concurrent." In giving permission for other insurance they 
have seemed to think that for policies to be concurrent, they should all be 
written for the same amounts and cover the same property, whereas they can 
all cover different items and still be concurrent as to the adjustment in case 
of loss, provided one policy does not insure two items under one amount, 
while another policy has a specific amount on each of those two items. 

I have often received from them farm applications worded as follows: 
$1,000 on his frame dwelling house, situation detached; $500 on his frame 
barn, situation detached — without any diagram accompanying the application. 
Upon inquiry I have found that the applicant had two or three barns, and 
that they were not all insured, hence should one of them burn he could claim 
that that was the barn that was insured. 

Again, I think the words dwelling house is preferable to the word dwelling, 
in writing on buildings, as the former means a building occupied for no other 
purpose, while the latter may mean the building wherever the party dwells, 
and some hold that it includes the contents. 

In view of the fact that the duties of the Committee on Forms of Policies 
is rather indefinite, I have taken the liberty of asking your indulgence for a 
few moments, and beg to offer for consideration a form of the printed condi- 
tions of a policy which I have framed within the last twenty-four hours. I 
have endeavored to make it much shorter than the ordinary forms, and at the 
same time group the similar subjects together and make it simpler to the as- 
sured, and while it may contain some things not in other forms, I think it 
embraces no condition but that which is exacted by all adjusters. 



57 



The form is as follows: 

Conditions upon which this Policy is Issued. — The assured covenants 
that every fact and circumstance affecting the risk, hazard, or rate of premium 
adversely to this Company, has been disclosed, and fully made known to this 
Company by the assured, whether inquiry thereof has been made in the ap- 
plication, or otherwise, or not; that none of the property has been over- 
valued, and also, that the application, plan, survey and description made for 
this insurance in writing, or otherwise, or referred to in this Policy, 
shall be and form a part of this Policy (the same as though 
incorporated herein in full), and a warranty by the assured; and also, 
that this Company shall not be bound by any act or statement made to, or 
by any agent or other person, which is not contained in the written appli- 
cation or endorsed on this Policy. Should this be a renewal of a former Policy, 
it shall be considered as continued under the original contract; but in case 
there shall have been any change in the risk, either within itself, or otherwise, 
not made known to this Company in writing by the assured at the time of 
renewal, this policy shall be void. 

Agent of Assured. — It is part of this contract that any person other than 
the assured, who may have procured this insurance to be taken by this com- 
pany, shall be deemed to be the agent of the assured named in this Policy, 
and not of this Company under any circumstances whatever, or in any tran- 
saction relating to this insurance, unless he or they are salaried employees, 
or hold a certificate of appointment, signed by the officers, or General Agent 
of this Company. 

Canceliation. — The insurance shall be terminated at the request of the 
assured, in which case this Company shall retain only the customary short 
rates for the time the Policy has been in force. The insurance shall also be 
terminated at any time at the option of this Company, on giving notice to that 
effect, in which case this Company shall refund a ratable proportion of the 
premium for the unexpired term of the Policy. 

Assignment and Mortgage.— No assignment of this Policy shall be valid, 
unless notice thereof be immediately given to this Company, and said assign- 
ment be approved in writing by a duly commissioned agent, prior to any loss. 
This Company reserves the right to approve the transfer or not. 

Description of Property not Covered by this Policy, Except when 
Specifically Mentioned. — This insurance does not apply to, or cover money, 
bullion, notes, accounts, deeds, evidences of debt or securities of property of 
any kind, jewels, plates, watches, musical or scientific instruments, models, 
patterns, medals or curiosities, opium, fences, privies, outbuildings, store 
furniture and fixtures, wooden or cloth awnings, wooden roofs over fireproof 
roofs, sidewalks, foundations or excavations, plate-glass doors and windows 
(when the plates are of the dimensions of nine square feet or more), frescoed 
work or gilding on walls or ceilings, merchandise in show windows. 

Conditions Voiding this Policy.— If the interest of the assured in the 
property herein insured, or the ground upon which it stands, now is or shall 
become any other less than the entire unconditional undisputed, sole and 
legal title and ownership; or if the property herein insured stands upon 



58 



leased ground; or if it now is or shall become during the term of this Policy 
anyways encumbered by lien, mortgage, judgment or otherwise; or if the 
property or any portion thereof shall be sold; or proceedings to foreclose any 
mortgage or lien be commenced; or if any portion of the property shall be 
levied upon, or any change take place in the title, use, occupation or posses- 
sion, whether by legal process, judicial decree, voluntary act or otherwise; or 
if the above described building or buildings or either of them now are, or 
shall become vacant or unoccupied; or if the risk be increased by any means 
whatever; or if it be a manufacturing establishment running at night or shall 
be ceased to be operated; or if the assured now has or shall hereafter make 
any other insurance on the property herein specified or any portion thereof, 
whether valid or not; then in every such case shall each and every one of the 
above named facts be made known to this Company, and consent thereto en- 
dorsed in writing in the body of the Policy, otherwise the Policy shall be null 
and void. 

This Company shall not be liable if the assured shall keep gunpowder, 
nitro-glycerine, phosphorus, saltpetre, nitrate of soda, petroleum, kerosene, 
(except as hereinafter provided), naphtha, gasoline, benzine, benzole or 
benzine varnish, or keep or use camphene, spirit gas or any burning fluid, or 
chemical oils, without the written permission in this Policy, or if gas, or any 
substance for a burning gas shall be generated or evaporated within the 
buildings or contiguous thereto, then, and in every such case, this Policy 
shall cease and be void; or if the above mentioned premises, or any part 
thereof, shall be used for, or to carry on, any unlawful traffic, trade or 
business. 

Ob fob loss if caused by forest fires, an invasion, insurrection, riot, civil 
commotion, or military or usurped power; or in consequence of any neglect 
or deviation from any law, or municipal, fire, or police regulation; or for any 
loss caused by the explosion of gunpowder, camphene, or any explosive sub- 
stance, or explosions of any kind, unless fire ensues, and then for the loss or 
damage by fire only, which loss shall be determined by the value of the dam- 
aged property after the casualty by explosion. 

If a building or any part thereof shall fall, except as the result of a fire, all 
insurance by this Company on it, or its contents, shall immediately cease and 
determine. 

Pbivileges.— Kerosene oil may be used for lights in stores and dwellings, 
and kept for sale in stores, in quantities not exceeding 200 gallons — to be 
drawn by daylight and covered lights only, and gunpowder, not exceeding 50 
pounds, may be kept for sale in stores, without prejudice to this insurance. 

Mechanics will be allowed to make ordinary repairs to buildings not ex- 
ceeding fifteen consecutive days in one year. Any other altering or repairing 
of any building, or any work thereon, by mechanics or others, will terminate 
the insurance and cancel this policy unless written consent thereof be first 
obtained and indorsed on this Policy. 

Waives. — The use of general teems, or anything less than a distinct 
specific agreement, clearly expressed in writing, and endorsed on, or attached 
to this Policy shall not be construed as a waiver of any printed or written 
condition or restriction herein. 



59 



Re-insurance. — In case of loss, to be settled in proportion as the sum re- 
insured shall bear to the whole sum covered by the re-insured Company. 

Other Insurance. — In case of any other Insurance upon the property 
herein described, whether made prior, concurrent, or subsequent to the date 
of this Policy (whether valid or invalid, or whether upon the same insurable 
interest or not), the assured shall be entitled to recover of this Company no 
greater proportion of the loss sustained than the sum hereby insured bears 
to the whole amount insured thereon, whether such insurance be by specific, 
or by general or floating policies; and if any such other policy contain an 
average or co-insurance clause, or condition, this Company's liability herein 
shall be limited thereby, the same and to the same extent as though such 
clause or condition was contained herein. 

Loss Procedure. — Persons sustaining loss or damage by fire shall forthwith 
give notice in writing of said loss to this Company, acccompanied with a copy 
of the written portion of all the policies therefor. 

When personal property is damaged the assured shall forthwith cause it to 
be put in order, assorting and arranging the various articles according to 
their kinds, separating the damaged from the undamaged, and shall cause an 
inventory of the whole thereof, including property claimed to be destroyed, 
to be made and furnished to this Company, naming the quantity, quality, 
and cost of each article. This Company shall have the right to take the 
whole or any part of the articles at their appraised value. 

The assured, his, her and their agents and servants shall, whenever re- 
quired, submit to an examination or examinations under oath by any person 
appointed by this Company, and subscribe to such examinations when re- 
duced to writing, and shall also produce their books of account and other 
vouchers, and exhibit the same for examination at the office of this Company, 
in San Francisco, as often as required, and permit extracts and copies 
thereof to be made; the assured also shall produce certified copies of all 
bills and invoices, the originals of which have been lost, and shall exhibit all 
that remains of the said propeity, damaged or not damaged, for examination 
to any person or persons named by this Company, and shall also produce a 
certificate under the hand and seal of the Chief of the Fire Department or 
his Assistant, if said property is situated within the jurisdiction of any such 
officer, stating that he has examined the circumstances attending the loss, 
and verily believes that the assured has, without fraud, sustained loss on the 
property insured to the amount which such Chief or Assistant, shall certify. 
The proofs of loss shall be made by the party insured. 

Any fraud, or attempt at fraud, or any misrepresentation in the proofs of 
loss, or examination, or any false swearing, shall cause a forfeiture of all 
claim no this Company under this Policy. 

Repairing or Replacing.— This Company reserves the right to repair or 
replace any property destroyed or damaged, either before or after appraisal, 
and as a part of the preliminary proofs of loss, the assured shall, if required, 
furnish plans and specifications of the buildings destroyed, and where the 
cost of rebuilding or repairing the same as determined by appraisal exceeds 
the sum insured thereon, the insured shall pay to this Company any excess 



60 



of said cost of rebuilding, replacing or repairing, including depreciation over 
the amount insured thereon by this Company; and, if required, give security 
for the payment thereof, and assign all their rights to recover of any other 
Companies, person, or corporation, with power of attorney to sue for and 
recover the same at the expense of this Company; and the insured shall 
permit this company to take possession of the premises for the purpose of 
making said repairs, or for rebuilding the property burned; provided this 
Company elects so to do. 

Loss Liability. — No claim for loss shall be considered total on any build- 
ing partially destroyed by fire and insured under this Policy by reason of 
law or ordinance that prevents its being repaired or rebuilt, but such loss 
shall be estimated and paid the same as if no such law or ordinance existed. 

This Company shall not be liable for loss by theft at or after a fire, nor for 
loss on property only while contained in the premises last described in writ- 
ing in the body of this Policy; and where property insured by this Company 
is damaged by bemoval from a building in which it is exposed to loss by fire, 
said damages shall be borne by the insured and the insurers, in such propor- 
tion as the whole sum insured bears to the whole value of the property in- 
sured. 

In case of loss on property held in trust or on commission, or if the 
interest of the assured be other than the entire and whole ownership, the 
names of the respective owners shall be set forth, together with their respect- 
ive interests therein. 

And if insured as a mortgagee, or on other interest not absolute, he or they 
shall assign to this Company the mortgages upon the premises insured, or 
other instrument of title or security, together with the debt or payment se- 
cured thereby, or so much thereof as will be sufficient to pay said loss. And 
a refusal to execute this assignment shall discharge this Company from all 
liability under this agreement. 

The best endeavobs of the assured shall be used in saving and protecting 
the property from damage when exposed to, at, and after the fire; and in case 
of failure to do so, this company will not be liable on this policy; and there 
can be no abandonment to this company of the property. 

Disagreement. — In case differences shall arise as to tbe amount of any loss 
or damage, whether before or after proof thereof has been received in due 
form, or after the property has been replaced or repaired, the matter shall, at 
the written request of this company, be submitted to two impartial apprais- 
ers, one to be selected by each party, and the two so chosen shall first select 
an umpire to act with them in case of their disagreement, aud if said apprais- 
ers fail to agree these shall refer the difference to such umpire, and the award 
of any two, in writing, shall be binding on the parties as to the amount of 
such loss or damage, and the acceptance of the property replaced or repaired, 
but shall not decide the liability of this company under this policy. 

It is mutually agreed that no suit ob action for the recovery of any 
claim by virtue of this policy shall be sustainable in any court of law or chan- 
cery, unless such suit or action shall be commenced within twelve months 
next after loss shall occur; and should any suit or action be commenced against 



61 



this company after the expiration of the aforesaid twelve months, the lapse 
of time shall be taken and deemed as conclusive evidence against the validity 
of such claim. 

Perhaps it would be well to point to a few of the more important changes 
and give you my reasons for making them. 

First — Conditions upon which this policy is issued. This differs very little 
from the ordinary form, except that the company shuts out verbal understand- 
ings, and is not bound by any statement except it is indorsed in writing on 
the policy. It also provides that the renewal of a policy is continued under 
the original application, and makes it obligatory for the assured to notify the 
company in writing of any changes. 

AGENTS OF ASSURED. 

This clause provides that any person procuring the insurance is the agent 
of the assured, unless he be a salaried employe, or has a certificate of appoint- 
ment signed by the company or its general agent. 

ASSIGNMENT AND MORTGAGEE. 

Provides that all assignments shall be approved by a duly commissioned 
agent . 

DESCRIPTION OF PROPERTY NOT COVERED BY THIS POLICY. 

This leaves out a number of articles and includes wooden and cloth awn- 
ings, wooden roofs over fire-proof roofs, sidewalks, foundations or excava- 
tions. Wooden roof over fire-proof roof is an item peculiar to our mountain 
towns, used for the purpose of shedding snow, and while we understand that 
we do not intend to cover it, at the same rate, as it might burn off a dozen 
times without destroying the building proper, nevertheless the assured con- 
siders it covered, and I think could enforce the payment for the same, 
notwithstanding our rate on it is much higher than on the building. While 
it is plain that the ordinary policy does not cover sidewalks, I have often had 
a demand made for the payment of them. Relative to foundations and 
excavations (referring principally to brick foundations under cheaply con- 
structed frame buildings). These items often amount to nearly one-half the 
amount of the policy, and while at the time of the adjustment the assured 
may claim that he will not rebuild, hence it is a total loss to him, we often 
find, after the assured has received his money, he changes his mind. 

LOSS PROCEDURE. 

The matter under this head is condensed about one-half, and I think covers 
the same ground. 

REPAIRING OR REPLACING. 

The object of this clause is to protect the company from being forced to 
pay a total loss on property, where the cost of rebuilding would be more than 



62 



the face of the policy, notwithstanding the location or lack of adoption 
might reduce its real value much below the face of the policy. To 
illustrate this we will suppose that it would cost $3,000 to rebuild, and 
that there was but $2,500 insurance. The assured, knowing that the 
real value of his building was not more than $2,000, nevertheless says, 
put me up a new building. If, however, he were called upon to pay 
the difference between the face of the policy and the amount agreed to be 
the cost of the new building, includiug depreciation, he would reject the 
proposition upon the ground that the property was undesirable, hence did 
not want it replaced. This clause prevents dishonest persons from getting 
new buildings for old ones, by compelling them to advance the estimated 
depreciation on their building burned. We have often felt the necessity of a 
clause like this, to apply to buildings in our mining towns, where at the time 
the policy was issued the property was worth more than the face of the 
policy, but before the policy had expired, the town had gone down, the 
property in consequence had depreciated in value until it was not worth 
more than two-thirds the face of the policy. I am unable to see wherein this 
clause works any hardship to the assured. 

LOSS LIABILITY. 

Provides that no building partially destroyed by fire shall be considered 
total by reason of any law or ordinance preventing the rebuilding of same. 

Also, provides that property cannot be removed from one place to another 
and the company still be liable, without their written consent. 

DISAGBEEMENT. 

Provides that the third appraiser must be chosen before the appraisal. It 
often happens that in case of disagreement between the two appraisers, they 
fail to agree on the third man. It also provides that in case the rebuilding or 
replacing has been performed by the company, that the acceptance of same 
is left to the same appraiser, thus preventing any feeling between the assured 
and the company. 

I do not offer the above as a perfected form, but invite free criticism. That 
there is need of a shorter form than those ordinarily used, that will cover the 
ground and be simple and more satisfactory to the assured, there can be no 
doubt. 

On motion, ordered received and placed on file. 

Mr. Sexton then read the following apology for the Committee 
on Losses and Adjustments. During its delivery he was greeted 
many times by applause. His humorous remarks were acknowl- 
edged in bursts of laughter. 



63 



WM. SEXTON'S APOLOGY FOR THE COMMITTEE ON 
ADJUSTMENTS. 

To the lire Underwriters' Association of the Pacific: 

Gentleman: Your Committee on Adjustments beg leave to say, that the 
Chairman, on whom we depended to make a report, and which report we still 
have hopes of getting, is unavoidably absent. The next member of the Com- 
mittee from whom we had reasons to expect something, has recently accepted 
the position of Secretary and retired from the grip-sack salvage hunting trade; 
thus, unfortunately for you, leaving as a last resort and with but little time, 
the tail end of the Committee, to offer a sort of an apology for the head and 
body. 

From time immemorial it has been the custom in making a report on this 
branch of fire underwriting, to state that "adjusters are born, hot made;" 
we therefore repeat in accordance with this custom that " adjusters are born, 
not made," but with this reservation, that if the observations of your Com- 
mittee are correct, few have been born, and none made during the last gener- 
ation or two. In making this remark we refer not to the real, but to the ideal 
adjuster, who is supposed to know from the appearance of a pile of ashes the 
size and construction of the building destroyed, to figure the projection of the 
cornice from the impression of the mudsill in the ground; to estimate the true 
cash value of a stock of merchandise totally destroyed, by the clothes w r orn 
by the claimant; to guess at the value of an outfit of household furniture, 
with no better data for a basis than the record of the rainfall for the previous 
season; to construe legally all the various phrases in describing risks, in 
policy writing; to decide, on a moment's reflection, questions which supreme 
courts take years to ponder over; to conclude whether a loss on ornaments 
should be paid for under a policy covering household furniture, useful and 
ornamental; whether a loss on trunks, valises, and (or) bandboxes should be 
paid for under a policy on household furniture, or wearing apparel, or either; 
whether a policy on wearing apparel covers umbrellas, fans, parasols, hair- 
switches, pins, hair-pins, shawl-pins, pins, breast-pins, ribbons, laces, 

combs, thread, clothiug in process of manufacture, or store teeth, or either. 
Whether thimbles, needles, sewing machines, and washing machines, are 
covered under household furniture. Whether a policy covering on pictures, 
covers a picture frame from which a picture had been removed. Whether a 
policy on a two-story dwelling house covers the one-story kitchen addition, 
and one-story woodshed adjoining, or additions made subsequent to issuing 
the policy. He is supposed to have a practical knowledge of all kinds of 
business; from regulating a sewing machine to running a quartz mill; from 
the value of a pint of peanuts to the cost of an invoice of hardware; he is 
supposed to know the best rule for apportioning non-current policies; the rule 
that will do equal and ex ict justice to all, that he may not by any mistake of 
his, cause his co-insurers to pay more than their share of the loss. He is 
supposed to be able to draw unbiased testimony from a biased and unwilling 
witness, from which to fix an actual cash market value at time of the fire, on 



64 

goods that his company did not want to buy, and the claimant, if his word 
could be relied on, would not sell for double the amount of the insurance. 

He is expected to make a settlement on one-sided evidence that will do 
justice to his company, and at the same time satisfy the assured and all the 
citizens of the neighborhood of the fire, Chinese included; they, all of them, 
taking an interest in favor of the assured getting the full amount of "the 
policy he had paid for!" The sum of the actual loss being to them a second- 
ary consideration, as they only know that they are justified in robbing a 
corporation — if they can. 

What the adjuster is expected or supposed to be, is very different from what 
he is really, or what he has to try to be. He must try to fix up the loss so 
that the assured and his neighbors, the agent and his friends, and last, if not 
least, that the management of the company shall all be satisfied; that his 
company may not get a black eye, his agent get to bucking, or get his own 
walking ticket when he gets home. Rather than hazard a lawsuit he must in 
nearly all cases of partial loss, and not a few of total, pay considerably more 
than he should. This is because insurance cannot afford to display the same 
amount of pluck in fighting for right that other business can. 

He must try to be a good judge of human nature; to be prompt, and yet 
courteous; to be firm without giving offense; to be able to detect the differ- 
ence between the honest claimant and the dishonest one who burned out to 
swindle the insurance company, and to treat the latter as affably as the former; 
he has to appear brave, for his sand is often tested; has to have a large stock 
of forbearance on hand, as his patience is sometimes strongly tried, often by 
ignorant honest claimants, who are taught to look on him as an enemy sent 
to cut down their claims, instead of looking upon him as a friend, sent to see 
that they get their just dues; he must be honest, because he carries the com- 
pany's purse, and its greatest interests are entrusted to his care. 

To settle a loss properly needs first, a good reliable agent, who will only 
insure good citizens, and will not take to exceed % (% would be better) of 
the actual cash value of the property; who will write his policy to cover 
specific amounts on each class of property; who when the loss occurs will see 
that the assured takes proper care of all property saved ; who does not com- 
mit the company, believes it is solvent, and is not afraid that the agent over 
the way will corral all his risks if this particular loss is not paid before the 
ashes get cold; well, such a loss will about settle itself. 

To conclude, your Committee would suggest that this Association appoint 
committees to report rules governing the apportionment of non-current poli- 
cies, based on the principle that no salvage can be made at the expense of 
any property or item of property covered in part by any unexhausted policy. 
Rules should also be reported, giving the definite meaning of all the policy 
phrases used in describing risks. 

It is in the power of this Association to educate the community to look 
upon an adjuster, in an honest loss, as he really is, the friend of the unfor- 
tunate, and whose only duty is to see that the assured gets what he is entitled 
to, and that his company is not swindled. To do this, your Committee will 
refer the members of this Association to W. F. Fox's Hints to Adjusters, on 
pages 233 and 235 in his " Special Agents Handbook," sold by the Coast 
Review, price $3.00. Sec. 2, p. 233, concludes with the following: 



05 



"Mere technicalities should be avoided and substantial justice to both 
"parties be strictly regarded." Section 23, page 235, in referring to the ad- 
juster, concludes as follows: "The role of a shyster or scalper he should 
" scorn, or to make what might be called a 'sharp adjustment,' merely for 
" the sake of securing a salvage upon his policy. He should always recog- 
" nize the claims of commercial probity, and allow the question of salvage to 
" take care of itself, and be a result, not an object in the adjustment of a 
61 claim." All good, read it. [ Applaua a.] 

On motion, ordered received and placed on file. 

Mr. Brown, chairman of the Committee on Legislation and 
Taxation, being called upon for his report, said that he expected to 
find a report in the hands of the Secretary of the Association. 
He thought that Mr. Dornin would have prepared one for him to 
read. As this was not the case, the time for making the report 
was extended until the next monthly meeting. 

THE REPORT OF THE COMMITTEE ON FIRE DEPART- 
MENTS AND WATER SUPPLY 

was read by the Secretary pro tern., as follows: 

Your Committee on Fire Department and Water Supply, beg leave to 
submit the following report: 

We can add nothing to the general fund of information concerning the 
apparatus needful to a well equipped fire department, as there has been but 
little change in the machinery required, and, so far as we have been able to 
gather, no new inventions in that line. We are happy to note several im- 
provements, more especially in the line of adding to the efficiency and the 
general utility oi the Babcock Chemical Fire Engine. 

They 'are now of all sizes, from the small extinguisher to be carried upon 
the back, to those on two wheels to be run by man-power, and those on four 
wheels for one or two horses. 

Our Fire Patrol bears witness to their efficiency and valuable aid in their 
work, and we should be glad to see them added to every fire department in 
our State. 

We believe our members who are "in the field " can do no better service 
to their companies, and the fraternity in general, than to urge their introduc- 
tion, in some form, into every town they visit, more especially in those 
places now without any apparatus. 

We have taken pains to ascertain the status of the departments and water 
supply of all the towns in our particular field, and beg to submit a tabular 
statement attached hereto for your inspection. 

Respectfully submitted, 

A. P. Flint, 
CM. Nichols, 

Committee. 



66 



Pressure 


+3+3 43 . 

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67 



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68 



Next in order was the report of the Committee on Statistics, 
which was read by Mr. E. W. Carpenter. 

ADDRESS ON STATISTICS. 

To the Fire Underwriters' Association of the Pacific: 

Gentlemen: — The committee of last year, with an old deputy commissioner 
at its head, gave such a complete statistical history of the insurance business 
in California, that there is little left for us but to write an appendix thereto. 

To the tabular statement of our predecessors, which we incorporate in this 
report, we have added a single line showing that 7 locals, 64 Eastern, and 28 
foreign companies, making 99 in all (or 8 more than in the former year), now 
compete for business at an average rate a trifle higher than that of 1878, but 
which yields the less aggregate premium of $3,433,004, as against $3,539,522 
of the previous year, from the fact that the amount written is about ten mil- 
lions less, viz: $228,964,659, as against $238,639,041. 

It would hardly be satisfactory to be unable to show a gain somewhere, and 
the losses, which show an increase of over one-fifth, come to our assistance. 
During the year the underwriters have comforted the mourners over the ashes 
of 1,110,344 departed dollars, this sum representing the fire loss of 1879*, as 
against $921,224 of 1878, the ratio of loss to premium having increased from 
26 per cent, to 32 per cent. The average amount of premiums received by 
each company has been $34,475, and the average loss to each $11,215. 

We have included in our tabular statement a column showing the average 
rate of premium during the last nine years. In 1871 this average rate was 
1.08, and in 1872, 1.19. The combined heat of the Chicago and Boston fires 
was required to warm up rates to 1.58 in 1873, and in 1874 they attained their 
highest point, viz., 1.59. Since then they have steadily declined, until last 
year, showing 1.58 in 1875, 1.57 in 1876, 1.53 in 1877, and 1.48 in 1878. Last 
year a greater number of companies were governed by the Board Tariff, and 
rates advanced to 1.50. But this increased rate for 1879 has not been a source 
of unalloyed happiness to the underwriters, inasmuch as the losses show a 
ratio of increase fourteen times as great. 

An examination of the table shows that there are more than four times 
as many companies doing business here as nine years ago, and that the 
average premium receipts of each are less than half what they were at that 
time. 

In addition to the tabular statement of California business thus far referred 
to, we also submit herewith a comparative table of city and country (San 
Francisco and State) business for the past five years, and which is, we believe, 
the first compilation of the kind that has been made. We are indebted to the 
Fire Patrol Reports for city premiums, and to Fire Marshal Durkee for city 
losses. 

* One of the foreign companies included its losses for the entire coast in its statement 
to the Insurance Commissioner, hence the report of the latter shows $1,116,203 losses, but 
above figures are correct. 



69 



OS 

oo 

1—1 

OD 

3 
g 

s 

W 
Ph 

Ph 


Percent. | 


■^OOOO I 

<M(M^ 1 




1 

o 
H 


$809,004 

956,990 

1,667,010 

$3,433,004 


Percent. | §§35 1 : 


3 


$341,879 
442,062 
905,725 

$1,689,666 


Percent. | Ssg^ 1 : 


1 incom i oo 

M(NOO CO 
qj i— 1 O CM CO 

-g ! t-r-^i-r '.co~ 

c3 | cDt—ico I ■<*< 

-£ | TtHO C— t— 

1 C/?= 




00 
OO 

a? 

g 

§ 

Ph 

Ph 


Percent. | 88S 1 : 


I8S88 
^ oscocm 
il ! io" m"oo" 

r2 I COCOtx 


$3 

crT 
co 

"I 

CO 


Percent. I Sc^S 1 ' 


City. 

$404,547 
421,382 
936,048 


CD 


Percent. | g^S"" , : 


1 
00 


HOI'* 
COTJHCO 
COO<M 

i-h"co"cm" 

050CO 
"*-*00 


^ i 




t-1 

CO 
& 

§ 

S 
Ph 


Percent. I g£$; | : 


(MOOO 
--H TOOCO 

if ! o"co"t»h" 

£ 1 r-H0>C» 

1 S '""' 


CO 
CO 
OS 

co" 

7? 


Percent. j gcs§ ! ' 


City. 

$476,321 
452,928 
938,588 

$1,867,837 


Percent. | 883 | : 


State. 
i 

$684,005 
476,057 
906,021 


1 

CD" 

1 

OS 






CO* 

s 

af 

s 
g 

1 

Ph 


Per cent. | ^^"^ j : 


Total. 

$1,179,791 

893,412 

1,638,415 


00 


Percent. ^^^ | : 


I t-0<M 
COCOlO 

cocoes 
-J? crTcNfoT 

mN '.OCDTfi 

Q 1 m^co 


00 

as" 
CO 
a 


Percent. | ££$ I 


OQ 


rt*C«-.CO 
OCSCO 
HIOH 

o"o".-T 

t-coo 

CD"«tH>- 

<3r 


to- 
il 

00 


HO 
CO 

af 
g 

s 

Ph 
Ph 


Percent. | %\ 


"3 

o 


coc» co 

(MlOCO 

oo"co"t-h" 
CO cot- 
es t~Tt< 


co" 

3? 


Percent. | Jocs^ ! : 


City. 

$516,655 
417,031 
739,965 


m 

CO 
CO 
CO 


Percent. I 3^3 | : 


i 

m 


HOOH 

t-t-00 

m-* co 

i-TcOrH 
(MCOCO 


1 

OS 

00 

! 5^ 






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50 



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3 



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CO 

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Hi 


Percent. | §§ 


"3 


H 


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CM 

CN 1 
8 


Percent. IS 


City. 

$222,437 


Per cent, j 8 


aj 


t- 
OO 

OO" 

CO 




00 

a? 

w 

' 


Hi 


Per cent. | 5? 







cys 

OJ 


Percent. | IS5 


City. 
$504,323 


Percent. | J§ 


a5 


t- 



K 






co" 

00 
CC 



Hi 


Per cent . | "^ 


3 



OS 

CO 

ctT 

CD 

cs 


Per cent. | "5 


>. 

3 


l-H 


Per cent. I Ss 


State. 
$514,366 


1A 
b» 

00 

aT 

02 

cc 



Hi 


Percent. ! g§ 


"3 


H 


CD 
CO 
°1 

OO 
OS 


Percent. 1 g^ ; 


_^> 


CO 
CO" 


Per cent . 1 Jo 


03 

OQ 


CO 
CM 
00_ 

4©= 


; 






5 



«1 

eq 
P 

: ^ 

H! 
< 

o 

M 

o 

e- 1 ! 



OCT5CO 
r-lOO 

1+ I 



lO lO CO 



IOCOCT5 I cs 

T+T IT 



1 1 1 



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(MOO 

I I I 



% 


(M^HCO 
OOr-H 


S 





I+ + 


+ 


>. 


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" i 1 + 


+ 




' 






(MO-* 


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c3 

->3 


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+ + + 


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(MCMCO 

+ + + 



. 


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+ 




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+ 


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t^t^co 

OHO 
I+ + 


+ 



c3 

6 e e 

13 c3 O 



70 



Fire Insurance Business in California during" Nine Years, 
1871 to 1879, inclusive. 

TABLE SHOWING!RISKS WRITTEN, PREMIUMS, LOSSES, AVERAGES, &c. 





Number of 
Companies. 


Risks 
Written. 


Aver- 
age 
Rate. 


Fire 
Prem'ms. 


Av'rage 
Pre- 
miums. 


Fire 
Losses. 


Avr'age 

Loss. 


Per 


YEAR. 


o 

O 
I 

F 




*4 

o 

i 

a 


o 

E 


Cent. 
Loss TO 

Pre- 
miums. 


1871.... 
1872.... 
1873.... 
1874.... 
1875.... 
1876.... 
1877.... 
1878.... 
1879.... 


5 

6 

7 
7 
7 
7 
7 
8 
7 


11 

22 
34 
48 
50 
57 
56 
55 
64 


8 
10 
11 
13 
17 
.22 
26 
28 
28 


24 
38 
52 
68 
74 
86 
89 
91 
99 


$185,218,963 
200,178,417 
184,545,576 
197,432,160 
221,653,672 
237,013,037 
256,893,278 
238,639,041 
228,964,659 


1.08 
1.19 
1.58 
1.59 
1.58 
1.57 
1.53 
1.48 
1.50 


$1,994,522* 
2,388,543 
2,926,632 
3,139,679 
3,493,381 
3,711,618 
3,933,920 
3,539,522 
3,433,004 


$83,105 
62,826 
56,281 
46,171 
47,207 
43,158 
44,201 
38,896 
34,475 


$l,201,612t 

667,704 

777,718 

783,303 

987,966 

1,269,397 

1,219,900 

921,224 

1,110,344 


$50,066 
17,571 
14,956 
11,519 
13,350 
14,760 
13,706 
10,123 
11,215 


*60 
28 
26i 
25 
28 
34 
31 
26 
32 



•Last year's report gave Premiums on Risks in Force, instead of on Risks Written, hence the 
variation in these figures. 
t Not including $286,508 paid by the Pacific and Occidental for losses of the previous year. 



This table, while it shows such an unsatisfactory state of the business, will 
afford consolation to many of our friends by enabling them to see that they 
are no worse off than their neighbors of the same class, and that if their re- 
ceipts are falling off it does not follow, as a necessity, that their risks are 
"stolen" by a rival company. 

Looking to the two extremes of the table of premiums, we find that, while 
the California companies did 36 per cent, of the entire business in 1875, they 
now do only 24 per cent. ; that Eastern companies have run their proportion 
up from 22 per cent, to 28 per cent., and that foreign companies have in- 
creased from 42 to 48 per cent. 

Referring to that portion of our table exhibiting city and couutry losses, 
and the percentage which they bear to the premium receipts of the two 
classes of business, we find that city business makes the best showing, and 
that the year 1876 is the only one in which city losses were relatively the 
largest. While the average percentage of country losses to premiums for the 
five years is 37, the average of city losses is only 23%, or less than two-thirds 
that of the other. If we consider the greater expense attendant upon the 
acquisition, supervision and adjustment of country business, and note the 
fact that country losses last year jumped up to 53 per cent, of the premiums, 
a proportion nearly two-thirds larger than the average of the four preceding 
years, we may begin to inquire whether country business is worth having at 
present rates, and whether future compilers of tariffs should confine their 



71 



mathematics so exclusively to subtraction and division while making their 
re-adjustments. However unsatisfactory country business may, for the 
present be, we will not pray too ardently for that promised city fire which is 
relied on to vindicate the law of average. 

The good fortune attending the cityjNbusiness is well deserved, for very 
much of it is due to the judicious efforts of the underwriters themselves in 
the maintenance of their fire patrol system. 

That portion of our table which shows the percentage of its previous year's 
business lost or gained annually by each class of companies, shows very 
clearly the motion of business. For the five years the California companies 
have made an average loss on their business of 6 per cent, per year, while the 
Eastern compauies have gained an average of 5 per cent, annually, and the 
foreign companies 6 per cent. If, however, we look only to the last two 
years, we find that the total business shows an average loss of over 6 per cent, 
per annum. 

p If we compare the premiums and losses of the last two years, we find that 
while the total business of 1878 fell off 10 per cent., the losses considerately 
reduced themselves 16 per cent, as compared with those of 1877, and we were 
reasonably happy. But while the premium receipts of 1879 were reduced 
only 3 per cent., the losses were increased over 20 per cent., as compared 
with those of 1878; so that, on the whole, we cannot consider fulfilled that 
" promise of a prosperous year to all," which was twelve months ago referred 
to by your Committee on Statistics. 

It is not the province of this Committee to seek for the causes which have 
produced these results. We may, however, by way of solace, and to show 
that we are not worse off than our fellow travelers in the " same boat, " refer 
to the fact that the Clearing House of San Francisco shows only $553,953,956 
clearings in 1879 as against $715,329,320 in 1878— a falling off of 23 per cent., 
and that the loss by failures for California alone in 1879 (as shown by Dunn 
& Co.'s Keports) was $5,963,578, as against $4,550,188 in 1878, an increase 
of 31 per cent. If we look to those branches of business more closely allied 
with that of insurance, we find the stagnation in, or decreased value of real 
estate property indicated by the fact that bank loans made thereon in San 
Francisco have decreased from twenty-four million dollars in 1877, to fifteen 
and a half million in 1878, and nine and a half million in 1879; and that, in 
the last year, for the first time, probably, in the history of the city, the re- 
leases exceeded the amount of loans made. The traditional loads of lumber 
which our solicitors have been able to follow up, and keep covered " from the 
word whoa!" have been few and far between, the receipts of lumber at this 
port having fallen off from two hundred and eighty-six million feet in 1877, 
to two hundred and sixty-four million feet in 1878 — and still lower — to two 
hundred and thirty-one million feet in 1879, notwithstanding that the amount 
exported has been larger than usual. 

The quantity of nails consumed at or distributed from San Francisco has, 
during the same period, diminished from 208,400 kegs to 166,100. 

The figures of this report show that most of us get less business, because 
there is less business to get and more to get it. A reduced rate-book is not 
an Aladdin's lamp, by the fingering of which palatial residences can be made 



72 



to spring up for us to tack our house plates on. Extravagant commissions 
have no magic power for creating first class stocks in B class buildings, and 
we doubt whether even the potent sand-lot has not a greater ability to make 
us poor than rich. 

Let us accept the situation; not fretting in the harness, but each pulling 
his load as best he may, hoping always for a turn in the lane and a more 
satisfactory grade. 

The reading of this report elicited great applause, and the 
President remarked officially that it was the ablest report on that 
subject ever produced in San Francisco. He begged that the 
Association would show its appreciation of Mr. Carpenter's 
services by a formal record of thanks. 

Mr. George Grant remarked that Mr. Carpenter had expended 
much valuable time and difficult labor to place before the Asso- 
ciation a systematic report which would be the foundation of all 
future efforts in the same direction, and that the report when 
published would reflect great credit on the Association through- 
out the State. Mr Grant then moved that the Association tender 
to Mr. Carpenter a vote of thanks. This motion was enthusias- 
tically seconded by several members. A resolution of thanks 
was then drawn up and read, and was acknowledged by Mr. 
Carpenter in a few graceful words. 

The report of the Library Committee was read by Mr. O. H. 
Cole, who said, previously, that he should read it with great 
reluctance, as following so close on the able report of Mr. 
Carpenter. 

ADDRESS. 

Mr. President and Gentlemen of the Fire Association of the Pacific: 

At the Annual Meeting two years ago, your Committee on Library, through 
its worthy chairman, Mr. Hart, gave to this Association a report in detail and 
witticism, second to none presented on that occasion, and one to which we 
must plead our inability to equal. 

We beg, however, your kind indulgence for the few moments alloted to ns, 
and invite your attention to the few suggestions we have to make. In Mr. 
Hart's report was enumerated not only the then present condition of our 
newly fledged Library, but suggestions calculated to materially improve and 
augment the same. Hopes were also entertained that in due course of time 
we should have a Library, not in name alone, but in fact — one to which 
reference bearing on any subject pertaining to the profession, might be 
readily obtained, and your Committee of 79 would earnestly recall to your 



73 



minds those suggestions, and ask that in the future more thought and interest 
be manifested, and more money be expended towards the purchase of all 
truly valuable works by which the members of this Association may be 
elevated. 

To the contents of our shelves there has been added during the year, the 
current numbers of the Monitor, Times, Spectator, Insurance Law Journal, and 
Coast Review, and to our worthy President, Mr. Hopkins, and to Ex-President 
Flint, we are indebted for valuable donations. 

From the former we received Volumes 1 to 15, inclusive, of the Monitor, 
and Volumes 18 to 26, inclusive, of the United States Insurance Gazette, and 
from the latter, Volumes of the Spectator, for the years 1868 to 1878, inclusive, 
and we beg herewith to remark, that like ourselves, a Library has always 
room for improvement, and that donations from any of our members will, 
without doubt, be duly appreciated. 

as has been truthfully remarked on more than one occasion during the 
year that has passed, the interest in this Association appears to be gradually 
deteriorating; little or no zeal has been manifested of late in its monthly 
meetings, and it is only just prior to the annual meetings that we begin to bestir 
ourselves, and to ask of each other, what has been done ? what benefits have 
been realized during the past twelve months ? Although it may not, perhaps, 
properly come within the province of this Committee to broach this subject, 
yet we feel it to be an all-important one, for with a continuance of this de- 
crease in interest, the Association would soon cease to exist, and a Library, 
however efficient, would then be of little or no avail. 

If, on the contrary, we realize and believe that we are founding a structure 
that will, at some future time, prove an honor to ourselves and a benefit to 
our successors; if we hope, eventually, to make our little Society in anywise 
the equal of our older and stronger brother, the " Association of the North- 
west," does it not behoove us to give not only our attention and a limited 
portion of our time to the regular meetings, but also to strive in our every- 
day callings, to give all in our individual power to strengthen it, and to en- 
deavor to more fully develop the objects and purposes for which it was 
established ? 

We believe in this Association, and we believe, too, that there is energy and 
talent amongst its members, sufficient to achieve in time, a grand success; 
and in this belief, we ask that you embark on this new year with a full de- 
termination to give your time and energy more fully to these interests, and 
as a result, we think you will find amongst other desirable ends that will be 
gained, that the interest in, and the interest of our Library will be manifest. 
[Applause.] 

On motion, received and ordered placed on file. 
THE KNAPSACK, 

from which, we have extracted several interesting items, was 
read by Colonel Kinne, the manager of that humorous sheet. 



74 



The Colonel said he was sorry that his business obliged him to 
be out of town so much, as it interfered with his managerial 
duties. The paper might be made a permanent feature of the 
Association, if it could be edited by some person of more leisure 
than he had himself. He suggested that the paper be read at 
each monthly meeting. Following are gleanings from the 
Knapsack: 

CALIFOKNIA KNAPSACK. 
Vol. 1. No. 1. 

C Mason Kinne, Manager. 

PROSPECTUS. 

The manager of the Knapsack desires to convey to its subscribers the as- 
surance that it starts out on the troubled sea of journalism with a large capital, 
vast resources, and an array of talent second to none of the first class period- 
icals of the day. 

Its design is set forth in the resolution which called it into being, and if a 
realization of its purpose is half as successful as the enthusiasm of its con- 
ception — a year ago— all will be well. 

Being a 12 months child, it ought to come into the world v as it does) full 
fledged and vigorous. 

We are prepared for any weather — favorable or adverse — our blankets are 
rolled and strapped, and the cold reception sometimes awarded to venture- 
some news-mongers will not affect us. The Knapsack is filled with good 
things, " from grave to gay, from lively to severe;" and without more of pre- 
face will proceed to show what of our promises can be fulfilled. 



A fire insurance agent refused to issue a policy to a man who owned a 
broken winged hen. He said the company had cautioned him to look out for 

defective flews . 



It was not the Secretary of a local company, doing a national business, 
that was recently offered a line on Zion's Co-Operative Institution of Salt 
Lake, at one per cent. After " hemming and hawing " at the physical inad- 
equacy of the rate, he finally succumbed with the remark, "But, after all, 
it must be a moral hazard. I have heard Zion very favorably spoken of." And 
the policy clerk wrote it up. 



There had been a fire of some extent in Oregon, and a gathering of insur- 
ance people and commercial men was the immediate result. Dining together, 
it was noticed that an unnaturally good appetite and a proverbial scarcity of 
good things, sometimes caused one of the genial adjusters to go for things 



75 

quite early and freely. Some allusion being made to the fact that he repre- 
sented the only company whose policy called for the expenses of the adjuster 
to be paid by the assured, one of the travelers quickly put the absence of 
viands and this clause in juxtaposition after this fashion: "Yes, and I see 
that he is utilizing the 'adjuster's claws' already." After that the rest of us 
stood a better show at the table. 



It burned a few weeks ago, but the records of Santa county failed 

to show that the assured had any title to the nice little dwelling. So the ad- 
juster quietly " hung up " the claim. On his next visit to the town he was 
approached by the agent of a rival company, who had evidently been retained 
by the assured, and who explained that the apparent discrepancy was only 
the result of a little mistake. "You see," said he, "my friend was in- 
structed to insure the property by its owner (who, by the way, generally 
insures with me), and by mistake had the policy made in his own name; but 
the Confederacy Insurance Company, which I represent, would never resist 
the claim on that account. We always consider the intention." " Is that so!" 
said our genial adjuster of doleful name. " Well then, it was doubtless the 
intention of your regular customer to order his property insured with you, and 
you had better pay the loss." 



Apropos of the coining of new words and changes in the orthography of old 
ones, we note that some of the fire companies in writing to their people in 
the old Mormon district of Southern California, spell the town San Burn- 
ardino. * 



THE SCALPER'S SOLILOQUY. 

[Tune— The Old Sexton. J 

Nigh to a house that was newly made, 
Stood a " Scalper " bold, and thus he said — 
The risk is good, and without delay 
I'll measure the width of this alley-way; 
Ah ! its only nine feet six I see, 
For the "tariff" too narrow, alas for me ! 
And he sighed from his quivering lips so thin, 
I must gather it in — I must gather it in. 

I must gather it in— for, year after year 

I've shaved the " tariff" without favor or fear; 

And rated these houses that cluster around, 

Without any regard to " exposures " as found; 

"Extra" and "special," "gilt-edged" and "scum,' 

Find place in my companies one by one; 

But come they from strangers or come they from kin, 

I gather them in — I gather them in. 



76 



Not many are with me, still I'm not alone, 

I'm king of the " tariff" and make it my throne; 

In dealing out rates I'm both cautious and bold, 

And my sceptre of rule is the " cheek " that I hold; 

From cottage or mansion men come at my call, 

And I fix up a rating to suit great and small; 

Let them dicker for " rebate" or come down with the "tin, 

I gather them in — I gather them in. 

I gather them in— and my secret I rest 

Far down in the depths of my own guilty breast; 

And the " Scalper " ceased — for lo, in the street 

He spied a " square " agent he cared not to meet. 

And I said to myself, when Time is told, 

A mightier voice than that " Scalper's " bold 

Will sound o'er the last trump's direful din, 

I gather him in — I gather him in. 



A SHADOW ON THE BUSINESS. 

Much has been written on the subject of insurance, bearing upon its origin, 
science, practice and development. 

Much has been said in convention and annual meeting. Happy bursts of 
impromptu, have told the humorous side. I do not remember to have heard 
discussed what may be termed the shadow on the business. 

That there is a dramatic, even tragic element, is well known to the gentle- 
men composing this Association. It is not known to the superior officer. It 
borders on sentiment, and is not in keeping with comparative statements, 
classifications or dividends. If the heart of the special is wrung in the pur- 
suit of his duty, it does not appear in his report. Not once, but often, the 
sad, sad spectacle of hope destroyed, ambition wasted, homes broken, family 
ties severed, and worse, is included in an adjustment. You do not seek these 
particulars, they come with the other particulars. 

In the midst of ruin — with some stricken, dazed claimant, you go over and 
over the same story, picking out the facts which serve to make proof that no 
condition of the contract has been violated — or the reverse. 

The company's check will hardly suffice to provide new clothing for the 
children. What is that to you ? Your stony face is a terror to that widow. 
You have need of that stony face to hide your real feelings. Do you re- 
member when the neighbors told how valiantly claimant Blank had worked 
that he might save his property ? 

Oh yes, you thought, same old story. You hunted up his dwelling. In re- 
ply to your question the gentleman said — "I am not Mr. Blank, I am his 
physician, he is dead — died suddenly of heart disease, from overwork." 

That was a good settlement; the directors approved the application of the 
removal clause — the claimant did not talk back; but the wail of mourning 
lingers in your memory. 



77 



Then the day we took train together bound for that delinquent agent. 
That tiresome, evasive, delinquent agent, with his merry-happy-go-lucky 
disposition, his cozy home, his hospitality. 

The limit was reached; he had been warned. We did not for a moment 
doubt that we would prosecute him to the full extent. 

We nerved ourselves to meet his genial denial, with firmness. We reached 
the spot just after they had cut the body down. 

There he was ! A suicide ! His young, handsome face purple in death. 
No money to be made by talking to it. 

Did we sympathize with the little broken-hearted woman ? 
My friend, we got that balanced, which the President said was doing first 
rate, under the circumstances. 

Our sympathy and the recollection of the many good traits of his character 
are left to mock us. 

Harry Smith, peace be to his ashes, once gave me a leaf from his expe- 
rience. Seeing in the newspaper an account of loss, one of his own pet 
mountain risks, he packed up and started. From the stage-driver he gath- 
ered particulars. 

It was a hard case; the claimant, an honest miner, with his family, were 
burned out of house and home and were camping in a shanty. No water to 
work the rocker — credit almost gone. Driver didn't know if the house was 
insured; nice house, cost a power of money. Didn't know how the fire started. 
It was six miles to town, too far to give an alarm. 

Harry alighted, and was met by the assured. "Do you remember me ?" 
said Harry. "Oh yes, I remember, you're the insurance man. I haven't 
"got anything to insure now, Mister; yonder is my house under them ashes.'' 
" Well," said Harry, " It was insured, was'nt it ?" " No ! No ! I meant to 
" have it done over again, but the time went by and it run out. Its no use 
" my grieving over it, stranger, but it brings us down to bed-rock." 

"Well, my man," said Harry, " I know more about that policy than you 
do. It has not run out yet, and lam here to pay you the- money." " What! ' 
he shrieked. "What ! Mister, don't you fool with me. You mean it ! Wife 
Wife ! we're saved, saved !" 

"Here, children, run and call your mother; excuse me, sir, I can't stand it, 
you tell the old woman." And the honest fellow went off and shed tears, 
which thumb-screws could not have forced from him. 

Harry camped with them that night; there were four children playing about 
the place, with a big St. Bernard dog. 

The host noticed Harry's look of admiration directed to the dog, and after 
a few words with his wife and the children, said: "Mr. Smith, we want to 
give you something for a keepsake; we haven't got anything but the dog; if 
you will take the dog with our best love, we give him to you freely. I 
wouldn't give him to another man, Mr. Smith. Money couldn't buy him 
from us." Harry accepted the present in the spirit of the gift. Next morn- 
ing, when the stage loomed in sight, a mournful group of children led the 
dog forward, each one hugged him in turn and whispered a brief farewell. 



78 



Harry took in the situation and addressed the children, in that cheery voice 
we remember so well, as follows: 

11 My little friends, I think that is the prettiest dog I ever saw, but I wouldn't 
take him away from you— no, not for the world. I give him back to you, my little 
friends." The shout of j >y that went up was dearer to Harry's heart than a 
thousand dollar salvage. He mounted the seat beside the driver, and was 
lost to their sight — forever I G. 



POKER BILL. 
I. 

It was in the days of stage travel over the Mojave desert from Los Angeles, 
before the Loop road was completed, that a party of travelers stood shivering 
at two in the morning of a spring day, waiting orders to get aboard the deep- 
chested, leather-lined Concord coach bound for Caliente, at that time the 
railroad terminus. Among the number, your contributor, used up by two 
days and nights anxious work on a particular adjustment. 

At the word he glides into the inside front seat, folds about him his ulster 
and falls immediately into sleep, deep as a well and welcome as May flowers. 
No amount of squeezing disturbs him. He sways with the motion of the 
coach and peacefully rebounds with each concussion; the first streak of dawn 
reveals him in these airy flights. It lights up the inside passengers, showing 
the form of a burly, glad-hearted, cheery-voiced commercial traveler, known 
to the trade as "Old Iron;" also, a slight, fair-haired, blue-eyed, boyish- 
looking young fellow, just up from a two-weeks' vacation in Arizona, sun- 
burned like a pirate, and armed like a footpad. The other passengers were 
of the usual variety. They are wide-awake, fresh and buoyant, drinking in 
the cool, delicious morning air. A dense, almost suffocating sweetness is in 
the breeze — a pure scent of bud and blossom everywhere. Suddenly a gold 
and yellow sunrise bursts forth, tingling the senses with delight. The very 
horses feel the exhilaration. The driver, too, is at his best. He pulls the 
six plunging broncos to a standstill, and tells somebody to get down quick, at 
the same time informing the off-leader confidentially that he will cut the 
whole heart out of him in a little minute. 

The somebody got down quickly and joined the insiders. He was a timid 
looking tourist, faultlessly dressed for travel, with an eye for points that 
smacked of the guide-books. Before many minutes he communicated to the 
commercial traveler a fear that the outside passengers were a desperate lot. 
"Their whole talk is of stage-robbers, and all of them carry deadly weap- 
ons." " Old Iron " saw his chance and seized it. Pointing to the sleeping 
special, he said in a tragic whisper, "That's Poker Bill himself !" "Who — 
who is he ?" faltered the tourist. "What ! never heard of Poker Bill, the 
Arizona outlaw; used to live in Baltimore; killed his father in '61; ran away 
and joined the Turks; turned up last year in Arizona. He is the captain of 
that gang outside. He's a dead shot. I once saw him shoot a man's ear off 
— man refused to drink with him. He can pick the end of your nose off, as 



79 



easy; best natured man in the world if you don't rile him; when he's riled it 
just seems as if hell was let loose. You take a fool's advice and don't you 
rile him. I ain't afraid of him myself; no, sir. I once saved his life. He 
thinks the world of me; he is going up to the Bay to keep shady for a while 
— shot a girl down in Prescott — just an accident — a mistake, as you may say; 
but the folks wouldn't have it; they draw the line on girls in Prescott. It's 
near breakfast time, and I'm going to wake him up; mind you don't rile him." 
The passengers enjoyed the sport, and blinked and grinned at each other. 
The tourist grinned, too, but in an uneasy way, like one who is sea-sick. 

II. 

When " Old Iron " woke me with a vigorous shake my remonstrance was 
couched in such forcible yet injudicious language, that the heart of the tour- 
ist sank within him, and the hope of meeting a ?niZd-mannered cut-throat died 
in his breast. A few broad hints gave me the cue. We fooled him to the top 
of his bent. We waded in gore for his benefit, rehearsed scenes of horrible 
fancy, dragged to light bleeding hearts and quivering fibers; while his face — 
now pale, now flushed — settled into a blue-white glare disagreeable to look 
upon. At this stage of the proceedings the fair-haired passenger took a 
hand. 

Up to this time, he had simply assented to the worst propositions by silent 
and solemn nods, as if mentally checking off familiar incidents He now 
produced a wicked-looking bowie-knife from his boot-leg and proceeded leis- 
urerly to pick his teeth. This was too much. With one bound the tourist 
disappeared through the stage-door; with alarm we saw him roll over and over 
in the dust. The stage halted; slowly the victim approached — uninjured, a 
wretched object. With outstretched arms and a trembling voice, he begged 
the mystified driver to let him ride outside. He rode outside all day, in the 
heat and dust. He would not leave his perch; breakfast, dinner, supper had 
no charm for him. At sunset the passengers held council; something had to 
be done. Supper was nearly over, and there he sat, alone, on the roof of the 
coach. By request, I reasoned with him — I said: "My dear sir, get down 
and eat; don't you see it is all a joke ?" No reply. " Get down like a good 
fellow and have supper." Silence. Sternly then I cried, " Look here, con- 
found you, if you don't get off that stage inside a minute, I'll blow a hole in 
you big enough to throw a pie through." That brought him. Down he came 
and did eat — ate like one who had fasted long in the wilderness. 

We rode through the twilight and reached the sleeping car on time. As I 
stretched myself in bed with a thrill of pleasure, in anticipating sleep, I heard 
a troubled voice inquire: 

" Conductor, has Poker Bill gone to bed ?" " Who ?" " Poker Bill, the 
Arizona outlaw." "Never heard of him." "Why, I saw you take a cigar 
from him and ask after his brother not five minutes ago." " Oh ! him; what 
did you call him — Arizona outlaw ? Outlaw be damned — that's an insurance 
adjuster." 



80 



San Fbancisco, February 3, 1880. 
Col. C. Mason Kinne, Editor California Knapsack — My dear sir: The 
following clipping, from a recent number of the Scientific American, we con- 
sider of sufficient importance to find permanent lodgment in No. 1, Vol. 1, of 
ous fraternity's Knapsack of useful knowledge: 

FIRE FROM STEAM PIPES. 

To the Editor of the Scientific American: In answer to D. E. Smith, Oneida 
Community, N. Y., I will say fourteen years' observation has led me to the 
conclusion that it is utterly impossible to fire wood, or even touchpaper or 
tinder, with steam in pipes up to any pressure of steam at maximum density 
— i. e., not superheated — that can be carried on any ordinarily constructed 
boiler. 

Why do not the w r ooden lagging of steam engine cylinders, portable boilers 
and large steam pipes on steamships, etc., take fire ? or the dust that accu- 
mulates on steam coils in woodworking machine shops ? Simply because the 
temperature of the steam pipe is not sufficiently high, and that the lowest 
temperature capable of doing so is between 500° and 700° Fah. 

But some will hint at conditions and make use of the words "concentration 
of heat" and " spontaneous combustion. " 

• Heat of this description cannot be concentrated, and is not capable of 
making anything hotter than itself, and spontaneous combustion has no place 
in our consideration, other than, if we are dealing with substances that are 
likely to fire spontaneously, heat will assist them, whether from steam pipes 
or any other source. 

No one imagines they can light a stick against a boiling kettle (temperature 
212°), but many will say, how would it be if I had 100 or 200 pounds of 
steam, it w r ould be so much hotter then ? It will be hotter. The following 
table shows the increase in temperature for each 100 pounds in pressure 
(above atmosphere) up to 400 pounds. Let them judge for themselves: 



Pressure. 


Temp. Fah. 


Increase temp. 


lib. 


214° 




100 lb. 


338° 


124° 1st 100 


200 lb. 


388° 


50° 2d " 


300 lb. 


422° 


34° 3d " 


400 lb. 


448° 


26° 4th " 



Respectfully, 

Wm. J. Baldwin, Heating Engineer. 
Elmira, X. Y., January 1, 1880. 



The other day an amiable looking and quite pretty young lady got into a 
crowded Mission street car and steadied herself by one of the roof straps. 

" I beg you will sit still — don't move," she said sweetly to a young man 
who offered to rise. The gentleman resumed his seat and waited until the 
car had gone about a mile beyond Woodward's Gardens and everybody but 
the young lady and himself had gotten out. Then, turning to his fellow pas- 
senger, he said: 



81 



"Now, then, Miss, what is it ?" 

■■ What is what ?" said the lady, beginning to look offended. 

11 Why, you asked me not to get out — now, what can I do for you ?" 

The young lady explained, wilh much confusion, that she only meant to 
decline depriving the gentleman of his seat. 

"Why, you don't say so!" exclaimed the gentleman with apparent sur- 
prise. " Why, to be sure — I might have known — how stupid of me. A pity, 
too, as I was on my way to church." 

" I'm very sorry," faltered the young lady. 

•'Well, it can't be helped now," continued the other sadly; and to show 
her he wasn't in the least mad he handed her out of the car and walked clear 
home with her. 

A fellow can have lots of fun in this town if he only keeps his eyes open. 

We would like to know the name of the insurance man living at the Mission 
who assumed this risk on stock of dry goods, and whether at full rates or not. 



And now, the manager having selected the foregoing from the mass of mat- 
ter provided, he realizes that life is short and time is precious, so, with the 
statistics of a Bromwell, the pleasantry of a Carpenter, the poesy of a Bailey, 
the pleasing diction or earnest pathos of a Grant, the clippings of a Staples 
and sundries by myself, we will buckle up the Knapsack and go "marching 
on " for another while. 

Having so kindly, considerately, and generously held open the ample flap 
of the Knapsack, in order that the charges of rhetoric and humor might be 
fired in by the anxious and waiting throng of contributors, we propose to 
thank one and all alike for their assistance in this, the first essay in the 
journalistic realm. 

President Hopkins said: " The Knapsack is too good to be 
allowed to perish." 

Under the head of Unfinished Business, Mr. Spencer intro- 
duced his friend Mr. T. E. Pope, who had succeeded him as 
Special Agent and Adjuster for the iEtna Fire Insurance Com- 
pany, and made application for membership to the Association. 

Mr. Chalmers made application for the admission to member- 
ship of Mr. J. C. Staples, Special Agent for Hutchinson & Mann. 

ELECTION OF OFFICERS. 

For President, Mr. G. W. Spencer was nominated by Mr. 
Cole; Mr. Chalmers seconded the nomination. Mr. Carpenter 
6 



82 

was then nominated by Mr. Gunnison, and thereupon Mr. Spen- 
cer expressed his desire to withdraw in favor of Mr. Carpenter. 
Mr. Spencer was elected. 

For Vice-President, Mr. Carpenter was nominated and elected 
by acclamation, the usual forms in such cases being observed. 

For Secretary and Treasurer, Mr, Carpenter nominated Mr. 
Kinne, but he declined, stating that it would be impossible for 
him to serve. He complimented the retiring Secretary and 
Treasurer, Mr. J. W. Staples, and proposed his re-election. On 
suggestion of Mr. Grant, Mr. Carpenter withdrew his nomination 
of Mr. Kinne, and, on motion of the latter, Mr. J. W. Staples 
was unanimously re-elected as Secretary and Treasurer, the 
Secretary pro tern, being instructed to cast a ballot for that pur- 
pose. 

For Executive Committee, Messrs. Geo. F. Grant, Edward 
Brown and Oliver H. Cole were nominated and elected. 

The new President then took the chair, which had^been va- 
cated by his predecessor. 

On vote, the Secretary was instructed to file a voucher for 
fifty dollars in payment of his expenses for the year 1879. 

Mr. Hopkins, the retiring President, then read his report, 
which was loudly applauded, and was as follows: 

ADDEESS. 

Gentlemen of the Fire Insurance Association of the Pacific: 

As the time approaches for me to retire from the office of President of our 
Association, to which I was elected by your kind consideration a year ago, I 
feel the occasion to be a fit one for a review of our business during the year 
1879, as compared with its predecessor, and for a few remarks bearing upon 
the present coudition and prospects of insurance interests on this coast. 

The preliminary reports of the various companies to the Insurance Com- 
missioner exhibit the following figures: 



83 



FIRE COMPANIES DOING BUSINESS IN CALIFORNIA. 

Kisks. Premiums. 

7 Locals wrote $59,290,002 $809,004 

59 Eastern wrote 58,794,272 956,990 

27 Foreign wrote 110,880,384 1,667,009 

93 $228,964,658 $3,433,003 

LOSSES PAID. 

7 Locals $264,912 46 

59 Eastern 259,838 89 

27 Foreign 585,592 68 

$1,110,344 03 

Being an average loss of 32 3-10 per cent, on premiums, and showing highly 
profitable results, as the effect of combined good luck as to losses, and good 
management as shown in maintaining rates of premiums and correct practice 
in the taking of risks. Compared with last year, the figures show one less 
local company than in 1878, two more Eastern companies, and one less for- 
eign company. Reduction in risks written, $9,670,372; reduction in premiums 
received, $106,661; increase in losses paid, $188,949; increase in ratio of 
losses to premiums, 6 per cent. Compared with the results of fire insurance 
business in California for previous years (for which, as well as for the above 
figures, I am indebted to the Coast Review), we find that the ratio of loss to 
premium was in 

1878 26.03 

1877 31.17 

1876 34.06 

1875 , 30.50 

1874 25. 

1873 28. 

1872 34. 

An average remarkably low, as well as even on a business so limited as is 
that of this coast. For it is to be noticed that during these years the amounts 
written have varied only from $148,345,589 in 1873, to $256,470,640 in 1877. 
By comparing our average rates of losses with those of other States and 
Canada, as published in the February number of the Coast Review, we find 
that very few States in very few years have shown results at all to be com- 
pared to ours, while the average of them all, including California, shows 62.89 
per cent, of loss. 

To what is this favorable result owing ? Probably more or less to each of 
several causes. We have but few special hazards — manufacturing risks, etc., 
compared with the Eastern States. We have but one large city in which dis- 
astrous conflagration is to be apprehended, and in this the precautions taken 
in our superb paid fire department, our copious supply of water, our telegraph 



84 



alarm system, and last, not least, our efficient fire patrol, have reduced the 
losses of late years to a mere fraction of the premiums paid. We use red- 
wood, so hard to ignite, so easy to extinguish, for the outside of all our 
wooden buildings, instead of the highly inflammable white and pitch pines of 
the East. Far less fire heat is required to warm our houses than in the colder 
States. Our buildings are all comparatively low. We are not liable to severe 
gales, especially at night, except while the wet southerly winds are deluging 
the State with rain. We have no fires fiom lightning, no freezing of water 
pipes in winter, and we have supplemented all these natural advantages by a 
comparatively firm maintenance of rates through the operations of the Board 
of Fire Underwriters ever since its reorganization in 1871. We h ive therefore 
secured better premiums than our Eastern brethren, while our ratio of loss is 
from natural, mechanical, and commercial causes, much less than theirs. 

During the past year this body has undertaken to do something towards 
mutual improvement in professional knowledge, by the introduction of essays 
on insurance topics, followed by debates thereon, at all our regular meetings. 
Unfortunately, so many of our members have been absent from the meetings^ 
that sufficient attention has not been excited to these discussions. As their 
interest and value depend on the thoroughness of preparation of the papers 
read, I would respectfully suggest that the regular meetings be held quarterly 
hereafter, instead of monthly as at present. Four interesting meetings per 
annum would be far more useful than twelve thinly al tended failures. 

A small beginning has been made toward the collection of a Library. I 
would respectfully suggest that a special subscription be put on foot among 
the underwriters for the purpose of acquiring a compendious Library of insur- 
ance works and periodicals. There is now no snch collection in this city, and 
its presence in these rooms, where all in business could have access to it for 
the purposes of investigation, could not fail to raise the standard of profes- 
sional knowledge among our members. 

Thanking you again, gentlemen, for the honor you have conferred upon 
me, by electing me to the office of your President, and for the courtesy I 
have always received while acting in that capacity, and asking your kind 
forbearance for the shortcomings on my part, which have been mainly due to 
ill health, I now retire in favor of my successor, Geo. W. Spencer, Esq., 
under whose administration I doubt not this Society will make substantial 
progress towards the object of its formation. 

Applause. 

THE NEW PRESIDENT'S REMARKS. 

President Spender said that he was very grateful for the honor 
that his election had conferred upon him. He would do his ut- 
most to make the Association a success. He suggested that if 
the Association met once in three months, instead of monthly, as 
heretofore, the meetings would be more largely attended aud 
would be more interesting. He hoped the members would con- 



85 

sider the suggestion, and if they thought proper to do so, that 
they would make the necessary amendments in the By-Laws. 

Mr. Gunnison then gave notice that he would move, at the 
next monthly meeting, that the Constitution be amended in ac- 
cordance with the views expressed by the chair relative to time 
of holding meetings, making them quarterly in future. Mr. 
Spencer also suggested that a committee should be appointed to 
collect funds for the Library. 

MR. EDWARDS AND THE LIBRARY FUND. 

Mr. Edwards said, in regard to the Library referred to by the 
President, that if such a subscription were canvassed among the 
underwriters and citizens, sufficient funds might be raised to get 
a copy of every standard insurance work in this country. He 
said further that he had the agency for all Hine's books, and 
some other of the principal insurance publications in the United 
States. He offered to order any other works that might be re- 
quired, and promised that on all books purchased by the Associ- 
ation from his agency, he would remit his commission. He 
begged that the Association would consider such a remission as 
his subscription to the Library fund. (Applause.) The Presi- 
dent hoped that the proposition of Mr. Edwards would be met 
in a similar spirit of utility and liberality. Mr. Kinne suggested 
that the President and Vice-President should serve as a Library 
Committee, and afterwards a motion to that effect was unani- 
mously carried. Mr. Edwards thought it important that the 
Library Committee just appointed should go to work at once 
and obtain funds. Then the books required could be placed here 
in a few days. 

mr. Hopkins' retiring remarks and the replies thereto. 

He said: " Before you put the motion to adjourn, I would like 
to make a remark or two. There have been so many able re- 
ports from the committees, and the meeting throughout has been 
of such uniform interest, that I feel great pride in this my last 
day's labor as President." Mr. Hopkins then briefly thanked 
the Association for its assistance and good-will, and hoped the 



86 



members had received such new vigor as would incite them to 
still stronger efforts under their new President. 

Mr. Gunnison proposed a vote of thanks to Mr. Hopkins. 
Mr. George Grant said that he especially wanted to thank Mr. 
Hopkins for the encouragement which the whole Association had 
received from him as their late President. By his influence the 
custom of speaking and writing had been introduced into the 
Association, and had brought out the originality of the members, 
and given them an opportunity for improvement which was not 
afforded elsewhere. He considered this practice one of the 
strongest bonds for keeping the Association together. After 
alluding to the personal efforts of Mr. Hopkins, and the benefit 
that had been derived from his lectures, the speaker seconded 
the motion for a vote of thanks to the retired President. Presi- 
dent Spencer hoped that a resolution would be adopted in ac- 
cordance with the motion, and that it would be spread on the 
minutes. The motion then was carried^unanimously. 

THE COAST REVIEW. 

Mr. Carpenter moved that a vote of thanks be extended to this 
paper, which had always shown both courtesy and generosity to 
the Association by the publication of their proceedings. Mr. 
Gunnison seconded the motion, which was carried unanimously. 

ADJOURNMENT. 

Mr. Hopkins returned thanks for the compliment paid to him, 
and moved the adjournment of the meeting. His words were as 
follows: " I am much obliged to the Association for their vote of 
thanks, and very grateful for it under existing circumstances. 
My duties, at present, seem to be hostile to many of the society, 
but it is only in business, and for no personal reason. Let us, 
while here, cultivate brotherly feeling and friendship, notwith- 
standing our interests may conflict outside. I move that we 
adjourn. " 

The meeting then adjourned. 



87 



SHOKT ESSAYS ON IMPORTANT SUBJECTS. 

This Association, at the suggestion of its President, Mr. C. T. 
Hopkins, inaugurated a system of essay readings and discussions, 
which is to be a permanent feature of its regular monthly meet- 
ings. The essays, which are to be original productions of the 
Association's members, will be read and discussed under the 
rules of the following resolution, which was adopted at the meet- 
ing on the 20th May last : 

Resolved, That under the head of New Business in the order of business, at 
the regular monthly meetings of the Association, the order of business shall 
be as follows: 

1st — The reading of an essay, to be not less than fifteen minutes nor more 
than a half-hour long, on some topic connected with fire insurance business, 
to be selected by the essayist and announced by him two meetings in advance, 
or to be assigned him by the President, from a list of topics to be kept by the 
Secretary, and so announced two meetings in advance; all members to be lia- 
ble to this duty in rotation, following the alphabetical order of their names. 
Any member expecting to be absent from the meeting at which he has been 
appointed to read, shall have the privilege of having his manuscript read by 
another member or by the Secretary, or of securing and appointing a substi- 
tute. In default of his performance, either in person or by a substitute, he 
shall be fined $20, unless excused for good and sufficient reason by the Asso- 
ciation. 

2d — Immediately following the reading of the essay, the President shall 
eall upon each member or guest present to discuss the topic in a speech, not 
to exceed five minutes, until all have been called upon; after which the dis- 
cussion shall become general. Authorities may be read by all speakers. 

3d — Any member desiring the discussion of any topic, may hand the same 
to the Secretary, to be placed upon the list. 

4th — When deemed desirable, the question under debate may be decided 
by a vote of the members present. 

5th — All manuscripts read at the meetings shall be handed to the Secretary 
and retained by him as the property of the Association, and such manuscript 
or portions thereof may be published as the Executive Committee shall deem 
worthy of publication. 

As part of the business of this meeting, Mr. E. Brown pre- 
sented and read an essay on "Elements of Rating Hazards." 

"ELEMENTS OF RATING HAZARDS." 

It has probably happened more than once in the lifetime of every member 
of the Smith, Brown, and Jones fraternity that occasion has arisen which has 



88 



made said member wish that his name had been anything else than S., B. or 
J. No scion of those respectable, but very numerous families ever more de- 
voutly wished for a change in his cognomen than does the writer — on this 
present occasion. Because, as it unfortunately happen*, his name appears 
first on an alphabetical list of the members of the Underwriters' Association 
of the Pacific (?), and on him has devolved the duty of preparing the first of 
the series of articles or essays, to be read at our meetings in accordance with 
the resolution lately passed; thus entering upon — to him — a new and untried 
field, without instruction or example from those who by education, experience 
and ability, are so much better qualified to address yon. 

The subject assigned by our worthy President as my text is that of the 
"Elements of Rating Hazards." Fire hazards may be primarily divided 
into two great classes — the " moral " and the " inherent." These again, par- 
ticularly the latter class, are susceptible of subdivision into many heads. The 
moral haz.ird embraces not only that pertaining to the ownership, but also 
those to the occupants and neighborhood. The inherent hazard includes, 
amongst others, those of construction, of exposure, of precautions against 
fire, of facilities for extinguishment, of occupation, of the direction and force 
of prevailing and occasional winds, of fuel, of lights, of care and watchfulness 
in management, of motive power (in manufactories), and of — as the hand-bills 
say — many others, "too numerous to mention." 

The most logical and sensible objection urged against the formation of 
Boards, or Tariff organizations by those who refuse to take part in them, is 
that they tend to deprive companies and their agents of the exercise of judg- 
ment, common sense, and free will; that the members of such bodies become 
mere machines, who instead of surveying a proposed risk, with a view of 
ascertaining its actual hazard, or of satisfying themselves as to whether it is 
a proper one to carry, and what would, in comparison with similar risks, be 
a suitable rate, merely turn to a tariff paternally provided by the organiza" 
tion, a tariff which ignores improvements or deficiencies, which classes the 
impecunious with the substantial, the ignorant and reckless with the skillful 
and careful. There is no doubt that there is much of truth in such an asser- 
tion. Men who are not required to think and judge for themselves, instead 
of advancing, retrogress. '\ he rate is not the overpowering factor in fire in- 
surance that so many suppose. The hazard — moral and inherent — is the 
chief thing to be considered. Select only the unquestionably good risks — 
good externally and internally, and in every point of view; they will prove 
profitable at almost any reasonable rate. On the other hand, howsoever high, 
will compensate for carrying inferior business. 

The elements to be considered in rating are so varied and so numerous, that 
it will be impossible for me, in the limits of such a paper as this, and without 
encroaching more upon your time than would be warrantable, to more than 
glance at a few of them. The rudiments of rating are familiar to us all. It 
would be a waste of your time and an insult to your intelligence, to enlarge 
upon them, and I will speak merely of two or three important hazards which 
are either ignored or not properly appreciated by California underwriters. 

The world is constantly changing, and in nothing is this more perceptible 



89 



than in the ever-growing hazards of fire, and in the consequent changes in the 
elements of rating. The two epochs which have been mo^t marked in this 
gradual but constant change have been those of the adaptation of steam as a 
motor and of the introduction of petroleum for illuminating and lubricating. 
Skilled adepts in the business of fire underwriting found that they had to 
unlearn much which it had taken years to acquire, and that in part at least, 
they had to commence again de novo. 

As yet, we are but mere babes in the science of fire underwriting — at the 
foot of the ladder only. Many of the hazards — their causes and origin are 
sealed mysteries to us. Spontaneous combustion and ignition ! How much 
do we know of them ? Who can account for the causes of the extraordinary 
loss of nearly five millions on flouring mills in the United States during the 
past year ? Who can explain the ignition of wood when no flame or spark 
has been near ? Scientific men tell us that carbonized wood rapidly absorbs 
the atmosphere, a high temperature is engendered, and spontaneous ignition 
becomes possible. A very ingenious theory, but who of us know what con- 
dition of things will produce all this chemical action ? Can we tell the baker 
how often he should renew the flooring boards over bis oven ? Can we in- 
form the manufacturer just how near he may bring a partition or floor to the 
boilers without any danger of the wood therein becoming carbonized ? Can 
we go into a woolen mill and prove to the satisfaction of the manager or su- 
perintendent just what condition of things will bring about a spontaneous fire 
in his waste ? just why his patent dryer is dangerous and inadmissible, and 
all about it ? 

In my opinion, the first thing necessary to make a competent insurance 
man is to acquire a thorough knowledge of chemistry. When the underwriter 
shall, after a practical education for the business, and many years of expe- 
rience in it, know just why and what for he charges a given rate on a certain 
risk, then there will be some hope that an intelligent article may be written 
on the •• Elements of Rating." Until then, it can only be a '' Magnificient 
System of Guessing." 

Treating of the hazards of which we do know something, and with which 
we are brought into daily contact, I would call attention to the height and 
size of buildings (especially of frames), as affecting the rate. It would seem 
unnecessary to say that a low frame building, one or two stories, is not only 
far easier to be handled in a case of fire, as compared with one of four or five 
stories, but it is also far less likely to get on fire. In a huge four or five 
storied structure may be found all sorts of tenants, and all kinds of business 
carried on. It is a fact patent to all that the upper floor of a four or five 
storied building is less valuable to the owner than that in a two or three 
storied building. Its inconvenience of access renders it undesirable for most 
purposes. If rented at all it is to a class of tenants to whom attaches a much 
greater moral hazard than to those who occupy first, second or third floors. 
Frequently it is occupied for storing away all kinds of old, inflammable trash, 
and is left to the exclusive guardianship of the rodent tribe, who find it just 
the place for their domiciles, and who carry to it any stray matches or other 
combustible matter they may come across in their nightly wanderings, and 



90 



there they hold high carnival. When, as sometimes happens, a fire does break 
out in that fifth floor, much to the surprise of the owner and occupants of the 
building, it is unperceived (by all, but the rats, who neglect to give an alarm) 
until the whole upper part is in flames, and usually ends in the entire destruc- 
tion of the buildiDg, and frequently of others besides. 

If there be any hazard greater than another which menaces the existence of 
this city, it is that arising from the presence of numerous, extensive and lofty 
frame structures, each of them occupied by numbers of people, many for 
varied purposes, and constituting in themselves " omnibus specials " of the 
worst character. 

I hold that the underwriters are greatly to blame for this state of things. If 
instead of charging the same basis rate and a like addition as an exposure for 
a little 10x12 one-story shanty as fpr one of these M frame rows set on end," 
as some one has aptly termed them, they had established height as well as a 
basis rate, and had allowed a reduction for anything below, and per contra, 
made heavy additional charges for everything above, they would have prac- 
tically prevented the erection of these eminently dangerous buildings. 

One other topic and this article must close ere your patience becomes ex- 
hausted. We of the Pacific Coast never fail to dwell, when opportunity 
occurs, upon the superior qualities of redwood as compaied with pine. I 
understand it has become a proverb with our brethren in the East " that red- 
wood cannot burn until it gets on fire." However we may be, we believe in 
redwood. We know that it is far less liable to ignite, and when on fire much 
more easily handled than other woods used in building. We have seen this 
demonstrated so often and never more forcibly so than in the preservation of 
the Catholic Convent at Reno during the conflagration of March 2d, last, that 
it is unnecessary to speak of it here. Yet, gentlemen (and it is a marvellous 
thing to me), we practically deny all our asseverations and condemn our pet 
lumber by using the same tariff, basis rates, additions for exposures and alb 
for redwood as for pine ! What a singular anomaly ! True, we add 40 per 
cent, to basis rates in Book 4 in certain parts of Nevada, and take the reduced 
scale for exposures in Book 3 in several counties around the bay of San 
Francisco; but the addition and reduction is made on the score of moral 
hazard, not on account of the difference in lumber. Would it not have been 
more equitable, and more consonant with our beliefs and doctrines, had the 
compilers of our tariff have either allowed a reduction from the rates in Book 
4 for all reJwood towns, or added a percentage to them for all pine towns, 
whether in California or Nevada ? 

Trusting you will overlook whatever of crudity there may be, as well as all 

sins, both of omission and commission in this contribution, I am, gentlemen, 

Most respectfully yours, 

Edw. Blown. 

Mr. James D. Bailey followed as the next essayist. He se- 
lected the subject of "Insurable Interest/' and at the meeting of 
the Association on the 17th of June, 1879, his paper was read, 
as follows: 



91 



" INSURABLE INTERESTS." 

Mr. President and members of the Fire Underwriters' Association of the 
Pacific — The subject given to us for consideration at this particular meeting 
is one which, you will all allow, not only comprises a wide range of thought, 
but, in many cases, requires a careful discrimination on the part of the un- 
derwriter, before issuing a policy. 

The limits of an ordinary essay are too contracted to do otherwise than 
give a mere synopsis of the subject matter that might be embodied under the 
head of "insurable interests," and I therefore simply ask your attention for 
a few moments to a rehearsal of some of the more prominent interests which 
the underwriter is called upon to protect under his policy of insurance. 

The insurance contract being one of indemnity, it follows, as a matter of 
course, that the person insured must have an interest in the property, and be 
so situated in reference to it that an injury thereto, or its destruction, would 
result in pecuniary loss to him. In taking up our line of thought on the 
subject, let us begin by a reference to that familiar clause in the printed con- 
ditions of most policies, which says, "if the interest of the assured in the 
property, whether as owner, trustee, consignee, factor, agent, mortgagee, les- 
see or otherwise, be not truly stated in the policy, it shall become void;" 
thus admitting that each one of the foregoing interests may be protected by 
the policy, if properly set forth in the written portion. Let us briefly con- 
sider them in the order they appear, beginning with M Ownership." 

The fact that the legal title is in the assured is not always the test of an 
"insurance interest," for the legal title may be in one who has no interest in 
fact, and, when such is the case, there is no insurable interest. An interest 
in fact must always exist. Thus, we find among recent decisions that where 
a party procured a policy worded " on his building," the policy having a con- 
dition to the effect that if the assured, not being the sole, unconditional and 
entire owner of the property, should fail to have his policy state that fact, 
the policy was avoided by proof that the assured had contracted to sell the 
property to one who had paid for it, though the buyer had taken no convey- 
ance of the legal estate when the policy was made. 

Next as to "Trustee." A person need not have a personal interest in prop- 
erty in order to have an insurable interest therein. It is enough if he has an 
interest therein for another as trustee, provided the interest existed both at the 
time of insurance and of loss; and his interest, as indicated in the policy, is 
alone covered thereby. It is necessary, however, that the assured should 
stand in such a relation to the property that its damage or destruction would 
entail pecuniary loss upon him, or those whom he represents. 

The same remarks apply to "Consignee," " Factor " and "Agent;" and 
there seems to be no question but that where a person has the custody, care 
or possession of property for another, although he has no pecuniary interest 
therein, he may insure it in his own name for the benefit of the owner, and 
the insurance will inure to the benefit of the owner. This right is put upon 
the fact that, having the possession of the property, exclusive as to all but 
the owner, to whom the assured is responsible, he has the right to protect it 



92 



from loss, so that it, or its value, may be rendered to the owner when he calls 
for his own. It is essential, however, that it should appear that the owner 
was the person intended to be benefited by the insurance when the contract 
was made; hence the printed condition of policy before referred to, requiring 
a statement therein of the true interest of the assured. 

So, too, in the case of a " Consignee;" he may, by representations made by 
him to the insurers, restrict their liability to his actual interest in the prop- 
erty, as in the case of one who procured a policy on "goods held by him in 
trust/' and represented to the insurers that he was receiving goods for sale 
on which he made advances, and that the owners might not be able to repay 
the same, and that he wished for a policy to secure himself from loss by fire 
thereon; it was held that the policy only covered the assured's interest in the 
goods. 

In contradistinction to this is the "insurable interest" of a pawn-broker, 
who, holding goods or property as security for advances made, has an inter- 
est therein; and, being bound to restore articles to the owners on repayment 
of the advances, he is not restricted to his advances, but may insure for the 
entire value of the property. 

The next interest specified is that of " Mortgagee;" and here we find that 
both mortgagee and owner may insure the same premises for their separate 
benefit, the mortgagee, however, having an "insurable interest " only for the 
amount of his claim. A mortgagee's interest has been defined to be "the 
ability of the property to pay the debt;" hence, if that ability becomes dam- 
aged, the company becomes liable; and while the doctrine that the mortgagee 
insured is entitled to a strict money indemnity, is perhaps the general legal 
principle laid down by the courts, it certainly seems open to question how far 
a company would be sustained in insisting upon its option to rebuild, under 
a printed condition to that effect, so loug as the written portion simply stated 
that the insurance was upon the mortgagee's interest. 

Among the various " insurable interests " not already noted, may be men- 
tioned that of " partnerships." The neglect (on the part of the insurer some- 
times as well as the insured) to have the interest intended to be covered 
properly stated in the policy, has given rise to much trouble and litigation, 
after a fire, in order to determine the rights' of all concerned. A partner has 
an " insurable interest" in partnership property of any kind to the extent of 
his interest, but cannot insure the whole in his own name, unless so expressed 
in the policy. When one partner takes out a policy in his own name, intend- 
ing to protect the interests ot the other partners, who subsequently ratify the 
same, he stands as a trustee for them as to the amount in excess of his own 
interest; so with a surviving partner, he may enforce a policy issued to pro- 
tect the entire interest in the property. 

A stockholder in a corporation, however large may be his interest in the 
stock of the corporation, has no such "insurable interest" in either its real 
or personal property as will uphold a policy as owiur of the property: but it 
has been held, and it would seem with much consistency, that he has such a 
qualified interest in the property of the corporation that he may, as such, in- 
sure the corporate property for his benefit, to the extent of his interest as 



93 



such stockholder. This question was raised and decided in the case of a 
policy covering $2,000 on the private stock of Gooddale <fe Hasford, in a saw- 
mill belonging to the Dubuque Lumber Company. It appeared that by 
11 private stock " was meant the share or interest of the assured (Gooddale & 
Hasfurd) in the capital stock of the company, that the insurance was effected 
with the full knowledge of the company, and that their interest in the stock 
of said company exceeded the sum insured. The Court held that this was an 
"insurable interest," and that the policy was valid, basing its conclusions on 
the fact that any interest which would be recognized by a court of law or 
equity is an " insurable interest'" and, as a moitgagee of real property has an 
insurable interest in the mortgaged premises, based upon the interest he has 
in the preservation of the same as security for a debt, upon precisely the 
same principle a stockholder may contract for indemnity against injury to 
the value of his stock; for he also has an interest in the preservation of the 
corporate property from destruction by fire, and in its destruction he sustains 
loss in so far as the value of his stock is depreciated in consequence thereof, 
or his dividends cut off. 

Regarding the "insurable interest " of a mechanic, it has been held that he 
who builds a house or does work upon a building for which he is to be paid 
when the building is completed, has an "insurable interest" therein to the 
extent of the work done upon the same at the time of the loss. This is 
predicated upon the ground that he has such an interest in the property as 
forms a legitimate basis for protection by insurance until the work is completed 
and accepted by the owner. That is, when the liability of the person for whom 
the work was done attaches, the " insurable interest " ceases. Thus, a lum- 
ber dealer furnishing materials, when by statute he has a lien upon the build- 
ing, has an " insurable interest " to the extent of his lien; but, unless the lien 
can be enforced, no insurable interest exists. Again, following out this prin- 
ciple that whenever a person has such an interest in and connected with prop- 
erty as that in case of damage to or destruction of it he would sustain a loss 
therefrom, although having no legal interest in the property itself, it has been 
held that where property has been attached, and a third person has given a 
bond therefor to secure its release, he thereby acquires an " insurable inter- 
est" in the property to the extent of the loss to which he would be subjected 
in case of its destruction; and this applies with equal force to the case of a 
sheriff attaching property, or, in fact, to any person who, at the request of 
the debtor, becomes responsible for its return. 

So also in the case of a person who is in possession of property under a 
contract to purchase; he has an " iusurable interest " to the extent of hispe- 
cuniary interest in the property; but should he ignore the printed condition in 
a policy requiring a true statement of interest, and accept the policy written 
on his building (or other property, as the case may be) the policy would be 
void. 

A tenant for a term has an " insurable interest " to the extent of the value 
of his leasehold interest; and a tenant who erects buildings under a right to 
remove them, may insure them as his own. A trespasser, however, or one 
who has erected a building on the premises of another without any license or 



94 



authority from the owner, whether the owner be an individual or the State, 
has no property interest therein, although he is in undisturbed possession of 
the premises, and consequently cannot effect a valid insurance thereon. 

Now, Mr. President, I am well aware that, in inviting me in my turn to 
bring before this Association an essay on " Insurable Interests," you in your 
superior wisdom would be lenient and not expect any great amount of orig- 
inal thought or expression, as the law bearing on such interests is. in most 
cases, sharply and clearly defined. Eut as no undertaking can be eventually 
successful, unless it be conducted on correct principles and by a well-regulated 
system, it is with a pleasant satisfaction that I see, in the resolution adopted 
by this Association, a forward step in one of the most important matters that 
come within the scope of our deliberations — namely, the introduction of top- 
ics for discussion, and the reading of short essays upon subjects intimately 
connected with underwriting. By such a course it seems to me that we shall 
all more readily grasp and retain not only the latest and best thoughts of the 
more experienced underwriters of the present day, but, at the same time, 
keep constantly before us all of the well-settled principles that underlie the 
insurance contract, thereby preventing many of the errors and abuses that 
creep into the written portion of the policy, to be brought out in strong relief, 
oftentimes, only by the flames. Jas. D. Bailey. 



L. L. BBOMWELL'S ESSAY, READ JULY 15th, 1879. 

FRAUD — MISREPRESENTATION CONCEALMENT. 

The exceeding fruitfulness of man's invention in cunning, stratagem, and 
hypocritical pretense, renders it impracticable to clearly enunciate what con- 
stitutes fraud in the very extensive signification in which that term is under- 
stood 1 . In its ordinary application to contracts, fraud includes any trick or 
artifice wilfully employed by one person to induce another to fall into, or 
detain him, in error, or to take an agreement contrary to his interest 2. It 
may also consist in misrepresenting or concealing mateiial facts, and may be 
effected by either words or actions 3. The legal intent and effect of a fraud- 
ulent act, prejudicial to the rights of others, constitutes a fraud upon such 
right, although the parties may deny all intention of committing a fraud 4 . 
While courts aim at defeating fraud they require before relieving liability 
under a contract on such account, that due and proper diligence and caution 
shall have been exercised, for it is a well settled axiomatic legal principle 
that M the laws assist the vigilant, not the careless." A misrepresentation as 
to a fact, the truth or falsity of which any person of ordinary vigilance or 

ll) Green vs. Nixon, 23 Beav., 530. Reynolds vs. Sprye, 1 D. M. & G., 691. 

(2) Green vs. Nixon, 23 Beav., 535. 

(3) Sibbald vs. Hill, 2 Dow, 266. Lovell vs. Hicks, 2 Y. & C, 55. Graves vs. White, 1 
Freem., 57. 

(4) Kirby vs. Ingersoll, 1 Harring. Ch., 172. 



95 



skill might ascertain, or a concealment of fact which such a person might 
uncover, does not in law constitute fraud; neither is a contract vitiated by 
the intention to violate it, which is not subsequently carried out 5; but the 
misrepresenting or concealing a material fact within the peculiar range of the 
party's own knowledge so acting, even though it be also within reach of the 
other party, if device is resorted to for preventing or restraining inquiry, 
voids the particular transaction on the ground of fraud 6 . Inasmuch as there 
is no "full, perfect and complete remedy " at law in cases of imposition on 
insurance companies by willful exaggeration and fraudulent misrepresentation 
for the purpose of effecting insurance, is it not a question well worth the ask- 
ing, why an appeal should not be made to the jurisdiction of a court of equity 
to set aside the contract on the grounds before stated? On an appellant in 
such instances the "burden of proof" is no stronger than in a defense on 
grounds of fraud. The rule of a court of equity is to interfere in all cases 
where the interesis of justice call for and require its interference 7 ; and it will 
annul an instrument obtained by fraud, although there may be a good de- 
fense at law 8 . If this be applicable to bonds, conveyances, deeds, etc., in 
consistency it should also apply to indemnity contracts. If the person by 
whose fraudulent misrepresentation a transaction has been induced, is not a 
party to the transaction, the transaction stands good and cannot be repudi- 
ated if the other party to the transaction has not been party or privy to the 
fraud 9 . The party defrauded must seek redress in an action at law against 
the party perpetrating the fraud 10 . A verbal or written statement before sub- 
scription of the policy as to the existence of some fact or state of facts tend- 
ing to induce the underwriter more readily to assume the risk by diminishing 
the estimate he would otherwise have formed of it 11 , is called a material fact 
or statement; per contra, a statement having no such tendency is immaterial. 
Representations are required to be fair, honest and bona fide. There must be 
no misstatement of any material fact or circumstance 12 . A false affirmation 
as to actual cost of property 13 , or as to amount spent in improvements 14 , 
amounts to fraudulent misrepresentation. A man who, by act or deed, falsely 
and fraudulently impresses the mind of another with a certain belief whereby 
he is misled, is as much guilty of misrepresentation as if he had deliberately 

(5) Per Tindal, C. J. ; Per Parke, B. ; Scott, 588, 594. 

(6) 6 Clark & F. Ho. L., 232. Com. Cont., 38. 3 Mann & G., 446, 450. 

(7) Johnson vs. Ogilvy, 2 Eq. Ca. Ab., 31. Chesterfield vs. Jannsen, 2 Ves., 155. Warn- 
burzee vs. Kennedy, 4 Dessan, 474. 

(8) Johnson vs. Hendley, 5 Mumf., 219. Henshaw vs. Atkins, 2 Root, 7. London Assu- 
rance Co. vs. Moses, 11 L. T., 532. 

(9) Appleton vs. Horton, 25 Me., 23. Lee vs. Vaughan, 1 Bibb, 235. Pulsford vs. Rich- 
ards, 17 Beav., 95. 

(10) Whittnore vs. Mackeson, 16 Beav., 128. Pul6ford vs. Richards, 17 Beav., 95. 

(11) Arnould. 

(12) Kisch vs. Central R. R. Co., 3 D. J. & S., 122. 

(13) Sandford vs. Handy, 23 Wend., 200. Pendergast vs. Reed, 29 Md., 398. 

(14) Ross vs. Estates Invt. Co., L. R., 3 Eq., 136. 



96 

asserted a falsehood 15 . A representation which has been made sometime 
previous to the date of the transaction is not fatal to the validity of the con- 
tract unless it can be clearly shown to have been immediately connected and 
formed a part of it 16 . 

When an underwriter is led into a contract by fraudulent representations 
or pretences by applicant or his agent, with intent to deceive and when such 
intention is actually accomplished, the contract will not be enforced whether 
the fraud has any direct tendency to induce too favorable au estimate of risk 
or not 17 . The materiality or immateriality of the statements or pretences as 
regards the risk or rate does not enter into the question, but only its general 
effect as a fraudulent deception 18 . Especially is this the case in response to 
direct inquiry by the underwriter, since by making such inquiry the mate- 
riality is implied, or so considered by him (Phillips) 19 . 

The foregoing applies with equal force to misstatements or suppressions by 
a broker, of any fact or state of facts likely to influence the judgment of the 
underwriter, and such misstatements or suppressions redound to the injury 
of the principal the same as if they had been made by himself. It is of no 
moment that the wrong was exclusively the broker's; it is sufficient that the 
principal has endowed the broker with his agency and furnished him with 
proper information, which of the latter's own volition is withheld 20 . Of 
course, the concealment or misrepresentation must be so directly connected 
with the transaction as to influence or prejudice the underwriting 21 . On the 
other hand, underwriters are chargeable with their agents' fraudulent repre- 
sentations when such representations are in furtherance of the principals' 
plans. Such fraudulent statements as part of the inducement to the contract 
prejudice the principal the same as if made by himself 22 , Also, the suppres- 
sion of a fact by an agent is a fraud which may be imputable to the prin- 
cipal 23 . 

While it is true that the principal is bound by the fraudulent acts of his 
agent perpetrated on third persons while the latter is acting under his au- 
thority in reference to the subject of his agency, yet a person dealing with 
the agent is not liable for the acts of the agent in fraud of the rights of the 
principal, when such person is not himself a party to the fraud 24 . 

Again, in regard to assertions made upon material matter, of which the 
parties are totally ignorant as to their truth or falsity, those parties must be 



(15) Sibbald us. Hill, 2 Dow., 236. Martin vs. Pennock, 2 Barr., 376. Graves & >\ hite, 1 
Freem., 571. 

(16) Barnes vs. Pennell, 2 H. L., 497, 530. 

(17) Phillips, Vol. 1, p. 291. 

(18) 1 Arnould Mar. Ins., 500. 3 Kent's Comm., 5 ed., 283. 

(19) Burritt vs. Saratoga Mut. F. Ins. Co., 5 Hill, 188. 3 Comst., 122. 

(20) Seaman vs. Fonnereau, Str., 1183. Fitzherbert vs. Mather, 1 T. R., 12. 

(21) Dawson vs. Atty, 7 East., 367. Edwards vs. Footner, 1 Camp., 530. 

(22) Welles vs. Glover, 1 Bos. & Pul., 14. Roberts vs. Fennereau, Park on Ins., 285. 
Ruggles vs. Ins. Co., 4 Mason, 74. 

(23) Proudfoot vs. Monntefiori, L. R., 2 Q. B.. 50. Fuller vs. Wilson, 3 Ad. & El., N. 
S., 58. 

(24) Wharton Comm , 185. Mason vs. Bauman, 62 111., 76. 



97 



held, in a civil point of view, as responsible therefor as if they had asserted 
that which they knew to be untrue 25 . 

A misrepresentation as to the legal effect of an instrument may be fraudu- 
lent; for, if a party be misled, and advantage be taken of his ignorance, re- 
specting his legal position and rights, there may be no legal fraud, but the 
case may come within the jurisdiction exercised by courts of equity to prevent 
imposition 26 . In this connection there is no positive evidence like proofs of 
loss, receipt for money paid, or cancelled and surreudered policy, to prevent 
a re-opening of an adjustment; but sufficient testimony may be adduced to 
make it appear that imposition was practiced by a wrong and fraudulent mis- 
statement respecting the party's legal position and rights. 

Impeachable transactions on account of fraud, in equity may become un- 
impeachable by subsequent confirmation, acquiescence, or by mere lapse of 
time; by the very act of ratification, confirmation or affirmance, the party 
performing such act becomes a party to the contract, and though not bound 
before, becomes thereby bound by it 27 . A party intending to seek relief on 
the ground of fraud should be prompt in communicating his discovery of the 
fraud, and consistent in his notice to the opposite party of the use he intends 
to make of it 28 . 

It will be observed that in the construction of contracts that are sought to 
be set aside on the ground of misrepresentation or concealment, the courts 
are less liberal to the fire, than to the marine, insurance companies 29 , and for 
this reason: The means of knowledge are, generally speaking, more within 
the powers of the parties to a contract of fire insurance, while marine under- 
writers must rely almost entirely upon the good faith and proper representa- 
tions of applicants, and trust to a full, free and frank disclosure of all the 
facts and circumstances. Where there is confidence reposed concealment be- 
comes more fraudulent 30 . 

Concealment which amounts to fraud is the non-disclosure of those facts 
and circumstances which one party is under some legal or equitable obliga- 
tion to communicate to the other, and which that other has a right, not 
merely in foro conscientice, but to "know juris et de jure 31 . 

If the fact is one which should have been disclosed, its omission on grounds 
of mistake, ignorance, accident, or forgetfulness cannot be taken into consid- 



(25) Reese Silver Mining Co. vs. Smith, L. R., 4 Eng. App., 64. Natl. Exc. Bk. vs. Drew, 
2 MacQueen H. of L., 103. Atwood vs. Wright, 29 Ala., 346. Bennett vs. Judson, 21 N. Y., 
238. 

(26) Colter vs. Morgan, 12 B. Mon., 278. Townsend vs. Coales, 31 Ala., 428. Drew vs. 
Clarke, Cook, 374. Broadwell vs. Broadwell, 1 Gilman, 595. 

(27) Kerr on Fraud & M. Pearsoll vs. Chapin, 44 Penn., 9. 

(28) Carroll vs. Rice, Walker's Ch., 373. Disbrow vs. Jones, Harring. Ch., 102. 

(29) Hartford Prot. Ins. Co. vs. Harmer, 2 Ohio St., 452. 

(30) 9 B. & C, 577. 4 Met., (Mass.) 381. 2 Kent Comm., 482. 

(31) Young vs. Bumpass, 1 Freem. Ch., 241. 

7 



98 



eration; it is, therefore, immaterial that concealment may not have been will- 
ful or intentional, or with a view to private advantage 32 . 

Concealment of a fact is not material if the statement of that fact would 
not have induced a party (otherwise desirous of entering into the transac- 
tion) to abstain from it 33 . 

Matters open to the exercise of judgment by both contracting parties, need 
not be mentioned; nor what the underwriter already knows, or what he is 
bound to know, or what he waives to be informed upon 34 , or that which is of 
a public and general nature. 

The underwriter assumes the risk against fire on the hypothesis that noth- 
ing unusual exists enhancing it, beyond the perceivable physical hazard, as, 
that the building is not already on fire or endangered by fires raging contigu- 
ous thereto 35 . If the building offered for insurance had previously been on 
fire t silence on such a material circumstance amounts to a iraud, and operates 
to make the contract void 36 ; but incendiary attempts after the execution of a 
policy, need not be reported to the company, the object of insurance being 
protection, even from the incendiary's torch 37 . 

Silence on rumored attempts to burn the property offered for insurance, 
when the evidence is conclusive that such rumors were in possession of the 
applicant, is always fatal to the claim, even though the inquiry be not made 
by the underwriters; such material circumstances are never to be withheld 38 . 

If we now rule out from our consideration the varied and often contradic- 
tory decisions on the subject of insurance contracts, it will be for the purpose 
of impressing our minds more forcibly with the purpose of the law by which 
those contracts are regulated. We shall then see most distinctly that between 
the insuring companies and their customers at large, there isjegally required 
the highest degree of good faith and commercial honor. A fortiori, these 
qualities should be the pervading essence in all contracts that are made 
between one insuring company and another. Between the original insurer 
and the re-insurer, such honorable dealing should be supplemented by the 
utmost care in the communication of facts. What one party might consider 
immaterial, would, perhaps, influence the other party into a declination of 
the risk. Omissions of statement which might be excusable in a layman, 
would not be extenuated in favor of a professional expert. The courts hold 
strongly on this principle, although their views are sometimes modified by 



(32) Cumberland V. Mu. Prot. Co. vs. Mitchell, 12 Wr., 374. See Kerr on Fraud Gener- 
ally. Farnum vs. Brooks, 9 Pick., 212. Davidson vs. Moss, 4 How., (Miss.) 673. Walden 
v*. Louisiana Ins. Co., 12 Louisiana, 134. 

(33) Pulsford vs. Richards, 17 Beav., 98. Davis vs. Cooper, 5M.&C, 270. 

(34) Carter vs. Boehm, 3 Burr, 1905. 

(35) Bufe vs. Turner, 6 Taunt., 338. 2 Marsh, 46. 

(36) Beebe vs. Hartford Ins. Co., 25 Conn., 51. Curry vs. Com. Ins. Co., 10 Pick 535. 1 
Marsh, 471. 

(37) Clark vs. Ham. Mu. Ins. Co., 9 Gray, 148. 

(38) North Am. Fire Ius. Co. vs. Throop, 22 Mich., 146. Walden vs. Louaiana Ins. Co., 
12 La. (O. S.),134. 



99 



the character of the original insurer and his reputation as to fairness in loss 
settlements 39 . 

The disclosure of matters of public record need not be made, unless the 
provisions of a policy expressly require it 40 ; of course, a negative answer to 
a direct inquiry in this respect would vitiate the policy. 

Where there is no warranty, but only a suppression or an omission to state 
facts, the importance of that which is suppressed or omitted, when an action 
is defended on the grounds of its materiality, must be decided by the jury 41 . 

With a single exception, the law, as we have collated it in the foregoing, 
applies more particularly to the inception of a contract, and at the risk of 
taxing the patience of the Association, we will now briefly refer to sec. 549 of 
our Penal Code, which covers the ground very thoroughly as to fraud, or 
attempt at fraud, on the part of claimant, after the contract matures into a 
claim for loss by fire : 

" Every person who presents, or causes to be presented any false or fraud- 
ulent claim, or any proof in support of any such claim upon any contract of 
insurance for the payment of any loss, or who prepares, makes or subscribes 
any account, certificate of survey, affidavit, or proof of loss, or other book, 
paper, or writing, with intent to present or use the same, or to allow it to be 
presented or used in support of any such claim, is punishable by imprison- 
ment in tbe State Prison not exceeding three years, or a fine not exceeding 
one thousand dollars, or by both." 

Our own reports furnish no test under this provision of the Code. As a 
rule, its introduction to the over pressing claimant results in compromises 
favorable to the adjuster, who with the fear of an expensive lawsuit, the 
variableness and uncertainties of juries before his eyes, closes his case by 
payment of just as little as. possible, leaving the unscrupulous claimant or his 
sympathizing neighbors to howl and hurl invectives for all time to come, at 
insurance companies in general, and the interested company in particular. 
This thin-skinned principle, we trust, will soon give way to aggressiveness on 
the part of underwriters, who should not be content with merely defending 
on these grounds, but when a case of attempted fraud can be clearly proven, 
they should require the provisions of section 549 prosecuted at the hands of 
a district attorney, with associate counsel, if necessary, to the bitter end, and 
should place an everlasting veto upon this conscienceless raid upon the 
companies' coffers whenever the slightest pretext exists for making a claim. 
Of all the diseases that afflict the body politic, one of the most noxious is 
that which has been fostered by the careless condonation of attempted frauds 
on the insurance companies. This disease is spreading to the core of the 
business, and can be arrested only by methods of cure as radical as its own 
condition. While underwriters are content with a merely defensive policy, 



(39) Bowery Fire las. Co. vs. N. Y. Fire Ins. Co., 17 Wend., 359. 

(40) Fletcher vs. Commonwealth Ins. Co. 18 Peck., 419. Hill vs. La Fayette Ins. Co,, 2 
Mich., 476. Norwich Fire Ins. Co. vs. Boomer, 52 111s., 442. 

(41) Sussex Co. Ins. Co. vs. Woodruff, 26 N. J., 541. People vs. L., L. &. G„ 2 N.Y., (S. 
C.) 268. Gates vs. Mad. Co. Mut. Ins. Co., 2 N. Y., 43. 



100 



the chances of successful spoliation are enormously in favor of the fraud- 
ulent claimant. It is not sufficient that his claim be defeated, he should 
himself be placed in the position of a defendant in an action at law. Of 
course, where the fraudulent claim is not of a felonious character, it would be 
difficult to inflict an}' punishment on the claimant beyond the disallowance or 
defeat of his claim; but whatever may be the legal bearings of this question, 
it is in the highest degree incumbent on the underwriting fraternity to reject 
all idea of compromising fraudulent claims, and in this way they may frus- 
trate the perpetration of those cowardly, thieving practices to which our 
language has given the generic name of Fraud. 
Kespectfully submitted, 

L. L. Bkomwell. 



Essay read by L. Beck, September 16th, 1879. 
MOKTGAGE INTEREST. 

To the Fire Underwriters' Association of the Pacific Coast: 

Gentlemen — Having been honored with the commission to write an essay 
on " Mortgage Interest," I hereby respectfully submit to you the following 
report on above subject: 

Admitting that many points laid down in this report (especially those con- 
cerning the general rules and conditions of insurance on mortgaged property) 
are fully known to all the members of this Association, still there might be 
some decisions on the above mentioned subject which are not generally known 
and which therefore will be of interest to them. Mortgage insurance proper is 
simply debt insurance, and where the policy issues direct to the mortgagee 
on his interest, reserving the right of subrogation, it simply means to guaran- 
tee the assured the face of the policy, reserving the right of a like amount of 
interest in the mortgage or assuming the whole and paying the difference — 
this by special agreement only. The " consideration " named in such a con- 
tract is not only the premium but also the mortgage and note held by the 
assured. 

But when policies issue to mortgagors with the usual clause, "Loss, if any, 
payable to mortgagee,' * the consideration is the premium only, and the guar- 
anty of the company is to stand between the assured and the mortgagee in 
case of the destruction of the insured property by fire; and I do not believe 
any court of ordinary acumen would decide that the assured should in addi- 
tion convey to the underwriter the cinders, ashes and ground left after the 
destruction of the property so insured, all subrogation clauses in policies and 
agreements with mortgagees to the contrary. The policy in this case be- 
comes an indemnity against loss as in any other, and who ever heard of a com- 
pany demanding a conveyance from the assured of all that remained after a 



101 

fire as a partial reimbursement of its loss? In fine, does it make any differ- 
ence with the rights of a company whether loss money is paid to the assured, 
his assignee or mortgagee? Is not the " consideration " of the contract the 
same in all cases? 

A mortgagee has an insurable interest and can take out a policy in his own 
name, and as the owner can at the same time insure, the property may be- 
come too heavily covered, and this additional hazard is one of the considera- 
tions of the subrogation of the mortgagee's interest to the company, and the 
policies ought to contain the following clause: 

"In case of loss under this policy the assured shall assign to this Com- 
pany an interest in said mortgage equal to the amount of loss paid." 

It would be advisable not to insure the mortgagee's interest direct, leaving 
out the name of the owner. In case of loss, caused by any act of negligence, 
incendiarism, etc., of the mortgagor, the company has no right to refuse pay- 
ment to the mortgagee, because the latter has no control over the insured 
property and is not responsible for the doings of the mortgagor. 

As an apt illustration of the principle of subrogation by mortgagees to 
assuring companies, I would cite a case from the records of the Nevada courts 
growing out of the great fire of 1875. One of our Eastern agency companies 
had a policy on the property of "A" with "loss, if any, payable to Mme. 
B." As a result of the little blaze inaugurated through the too free use of 
coal oil (or candles), by the unfortunate "beauty of the hill," the building 
of Mme. "B.," so insured, was destroyed — "nothing left but the ground." 
The adjusted loss was $800, and when the company came to payment, 
they, under the subrogation clause in their policy, demanded an assignment 
by the mortgagee (and payee under the policy) of the note aud mortgage held 
by him on the property, which was assented to and duly recorded, and the 
loss paid, the company taking receipt of assured and payee, as is customary 
in such cases. Demand for payment of note by mortgagor was frequently 
made, but refused. At maturity of note and mortgage the company bring 
suit in foreclosure, obtain judgment and sell the property under Sheriff's 
hammer, notwithstanding a homestead had been filed against the title by the 
assured and a new building erected since the fire. The company received 
from the Sheriff the amount of loss paid together with 2 per cent, per month 
interest and costs of foreclosure, including attorneys' fees. In other words, 
the company took the place of original mortgagee and recovered under all the 
provisions of the Mortgage Contract. 

"The question of 'consideration' was not set up by the defense, otherwise 
the judgment of the Court might have been adverse to the company," was a 
remark of the company's attorney, a man learned in legal lore, and once at 
the head of the State judiciary of Nevada; from which your essayist would 
infer that the company, in paying this loss, did so legally upon the original 
premium consideration, and not upon any expectation of reinbursement by 
the assured for any moneys advanced to the mortgagee as the purchase price 
of the property insured. 

The only " consideration " of which the courts would take cognizance was 
the premium which the owner paid to the underwriter to protect and indem- 



102 



n\fy him against loss and damage by fire to the property insured, not to 
advance moneys to pay the mortgagee and ease the stress usually following 
upon the footsteps of a destructive fire, the said moneys to be returned to the 
indemnifyer from the sale of what little remained. 

From the Western Insurance Review, page 383, June,*1879, I quote the fol- 
lowing decision, bearing on the subject of " Rights of Mortgagee," in the 
case of Graham vs. Phoenix Ins. Co., in the New York Court of Appeals: 

"Defendant, Ellen E. Gleavey, executed a mortgage to the plaintiff cove- 
nanting to keep the buildings on the premises insured and to assign the 
policy to him, and in default that the plaintiff might do so at her expense. 
She afterwards conveyed the premises to the infant defendant Jack, whose 
guardian she was. While Jack owned them, plaintiff, on his own motion, 
procured an insurance in defendant, Phoenix Insurance Company, insur- 
ing Jack as owner and himself as mortgagee, loss payable to mortga- 
gee. In an equitable action against the three, held, that Gleavey 
could not be held, individually, to furnish proofs of a loss, a fire hav- 
ing occurred, nor as guardian would she be under any greater obli- 
gation to do so than her ward would be if an adult. The latter could not, 
by his contract with the insurance company, bind her to furnish proofs. 
However embarrassing, difficult, or impossible under these circumstances, it 
may be for plaintiff to furnish proofs, he cannot compel one to relieve him 
who is under no legal obligation to do so. The obligation, if any, is simply 
a moral one of which the law does not take cognizance. Nor has the Court 
in this action and for such reasons any power to cut off the insurance com- 
pany's defense of a short limitation of time for the commencement of an 
action upon the policy. If such defense does not exist, this action is super- 
fluous; if it does, the Court cannot take it away. Nor can there be any 
recovery here upon the policy, for such action is one of law, and this action 
is based on the assumption that proofs have not been furnished." 

Judgment was given for defendants. 

I clip from the Insurance Times of July, 1879, page 457, the following: 

" A company issued a policy in the sum of $1,000 to a certain party upon a 
dwelling-house property, loss, if any, payable to two separate parties, who 
held mortgages upon the property — $3,000 each. These mortgages were filed 
for record simultaneously, being of the same date. The property was de- 
stroyed by fire during the currency of the policy. How shall the money be 
paid to the mortgagees, there being no priority of record of the mortgages? 
Both of the mortgages being of the same date, for the same amount, and filed 
for record at the same time, must be held to be simultaneous, and the loss 
being made payable to the mortgagees without any special distinction, it only 
remains for the company to pay the amount to the parties named in one 
sum taking their joint receipt for the same, leaving it to them to make such 
distribution of the money as they may agree upon. 

Usually, when loss is made payable to a mortgagee "as interest may ap- 
pear," and, as is sometimes the case, such loss is made payable to two mort- 
gagees indiscriminately, holding mortgages of different dates and filed for 
record at different times, the interest of such mortgagees will depend upon 



103 



the priority of record of the mortgages, that first of record having the priority 
of right to the insurance money, the company being subrogated to so much 
of the mortgage securities as it may pay to the mortgagee. The phrase M as 
interest may appear" governs in this last case. The interest of the first 
mortgagee appearing as a prior claim, it is so regarded in law. 

The mortgagee's interests, whatever they may be in the policy, arise from 
and are solely contingent upon the rights of the insured under the terms and 
conditions of the contract. If the insured have no rights, from breach of 
conditions or other cause avoiding the policy, the mortgagees have no right 
not possessed by the mortgagor at the time of the loss. The direction in the 
policy, loss payable to them, is not an assignment of the insurance, but is 
simply a direction in advance as to the mode of payment of whatever may be 
due to the insured at the time a loss occurs; Sec. 16, Peters 495-6, Gray 129, 
8 Id. 28, 17 N. Y., besides many others, showing that the mortgagees have 
no recourse outside of the mortgagor. 

The National Board form of mortgage clause for insurance companies is a 
modification of the latest Blodget clause, as it is called, and is as follows: 

It is hereby covenanted and agreed, by and between this company and the 
mortgagor or owner named in this policy (or any assignment thereof approved 
by this company) and the mortgagee, also herein named, that the said mort- 
gagee's interest is the first mortgage on said property, and that this special 
agreement is to protect the interest of said mortgagee only, and that this pol- 
icy, or any part thereof, shall not be invalidated as to such mortgagee only, 
by any alienation of the title to the property, or any change of occupation, or 
increase of hazard, or by any act or neglect of the owner, unless the same is 
within the knowledge of said mortgagee. It shall be optional with this com- 
pany to require proof of loss of the owner, and to adjust the loss with him, 
and such adjustment shall be binding upon the mortgagee the same as if this 
special agreement had not been made. 

It shall also be optional with this company to cancel this policy and termi- 
nate the insurance at any time, by refunding or tendering either to the mort- 
gagor or owner, or to the mortgagee, or to the representative of either of them, 
a ratable proportion of the premium that has been paid; or, if the premium 
is unpaid, the insurance may be terminated by notice to either of said parties, 
or to the representative of either of them, that this policy is cancelled for 
non-payment of premium. Provided, however, that this policy shall con- 
tinue in force for the benefit of said mortgagee only for ten days after notice 
to said mortgagee of such cancellation, and shall then cease. If, however, 
insurance shall sooner be obtained in some other company or companies, this 
policy shall then at once be void as to the mortgagee also. 

The said mortgagee shall notify this company of any change of occupancy, 
change of title, or any increase of hazard whatever, as soon as the same shall 
come to his knowledge, and pay any additional premium required at the es- 
tablished scale of rates for such hazards. 

Whenever a loss shall occur, and this company shall claim that the policy 
is void as to the mortgagor or owner, in whole or in part, and would be void 
as to the mortgagee if this special agreement had not been made; or if there 



104 



is other insurance on said property to the owner, not payable to the mortga- 
gee, then before this company shall pay the mortgagee any sum for loss un- 
der this policy, the mortgagee shall assigu and transfer to this company an 
interest in all securities held for the mortgage debt, subrogating this company 
to all the rights of the mortgagee in the mortgage, and securities to an amount 
equal to the money to be paid to the mortgagee by this company in excess 
(if any) of such amount as this company would be liable to pay to the mort- 
gagor or owner if this special agreement had not been made. 

And when this company shall claim that the policy is wholly void as to the 
mortgagor or owner, then this company may at its option pay to the mortga- 
gee the whole sum due and to become due on said mortgage and securities, 
and thereupon the mortgagee shall assign and transfer to this company all 
such mortgage and other securities, with full power to this company to col- 
lect the same in the name of the mortgagee or otherwise (but at the cost of 
this company). And in all cases of subrogation, the mortgagee shall cove- 
nant and agree, in such assignment, that the amount claimed of this company 
is a valid and subsisting debt under such mortgage and securities. 

It is hereby further covenanted and agreed that the foregoing conditions 
shall form a part of this policy, and that the regular conditions thereof shall 
in all other respects remain in full force. 

In conclusion, I would refer to a very interesting article in the Coast Review, 
October, 1877, page 384, by "Occidental," to which the Coast Review replied 
in their issue of December, 1877, page 484. 

Kespectfully submitted. 

L. Beck. 



105 



LIST OF OFFICERS FOR 1880. 

GEO. W. SPENCEK President. 

E. W. CARPENTER Vice-President. 

J. W. STAPLES Secretary and Treasurer. 

Executive Committee. 
Geo. F. Grant, E. Brown, O. H. Cole. 

Standing Committees, for 1880. 

LOCAL AGENTS. 

Wm. Sexton, T. A. Mitchell, Louis Mel. 

FORMS OF POLICIES. 

Jas. D. Bailey, A. R. Gunnison, C. D. Haven. 

LOSSES AND ADJUSTMENTS. 

Wm. Macdonald, W. L. Chalmers, R. H. Naunton 

LEGISLATION AND TAXATION. 

W. J. Callingham, John Rae Hamilton, J. C. Jennings. 

FIRE DEPARTMENT AND WATER SUPPLY. 

C. Mason Kinne, A. D. Smith, T. E. Pope. 

STATISTICS. 

A. P. Flint, Z. P. Clark, W. P. Thomas. 

LIBRARY. 

Geo. E. Butler, E. Brown, C. J. Van Tassel. 

8 



LIST OF MEMBERS. 



L. L. Bromwell, Vice-President, California Insurance Company. 

Geo. F. Grant, Special Agent and Adjuster, North British & Mercantile In- 
surance Company. 

Z. P. Clark, Special Agent and Adjuster, Hutchinson & Mann agency. 

Wm. Sexton, Special Agent and Adjuster, Fireman's Fund Insurance Com- 
pany. 

A. D. Smith, General Agent, Northwestern, Amazon, and Fairfield Insur- 
ance Companies. 

Wm. Doolan. Special Agent and Adjuster, State Investment and Insurance 
Company. 

Geo. W. Spencer, Manager, London & Lancashire and Manchester Insurance 
Companies. 

J. W. Staples, Special Agent and Adjuster, London and Lancashire Insur- 
ance Company. 

E. Brown, General Agent, Faneuil Hall and Lycoming Insurance Com- 
panies. 

A. J. Bryant, President, State Investment and Insurance Company. 

J. B. Garniss, Adjuster. 

J. D. Bailey, General Agent, Union Insurance Company. 

A. R. Gunnison, Special Agent and Adjuster, Commercial Insurance Com- 
pany. 

Robert Dickson, Manager, Imperial, London, Northern, and Queen Insur- 
ance Companies. 

Geo. D. Dornin, Secretary, Fireman's Fund Insurance Company. 

* Henry Smith, Special Agent and Adjuster, Liverpool & London & Globe 
Insurance Company. 

H. W. Snow, General Agent, American Central, Metropole and Reassurances 
Generales Insurance Companies. 

W. J. Landers, General Agent, Guardian Assurance Company. 

E. E. Potter, General Agent, Oakland Home Insurance Company. 

J. F. Houghton, President, Home Mutual Insurance Company. 

W. J. Callingham, General Agent, South British and National Insurance 
Companies. 

tD. L. Kirby, Associate Manager, Royal Canadian Insurance Company. 

tW. W. Dudley, Illinois State Agent, German- American Insurance Company. 

Wm. Macdonald, Special Agent and Adjuster, Imperial, London, Northern 
and Queen Insurance Companies. 

C. T. Hopkins, President, California Insurance Company. 

W. L. Chalmers, Special Agent and Adjuster, Hutchinson & Mann's Agency. 

J. R. Hamilton, General Agent, Commercial Union Assurance Company. 



107 



T. C. Grant, General Agent, North British & Mercantile and German- 
American Insurance Companies. 
Chas. H. Cushing, Secretary, State Investment and Insurance Company. 
*W. J. Stoddart, Agent, New York Underwriters' Agency, etc. 
A. P. Flint, Manager, Hartford Fire Insurance Company. 
Hugh Craig, General Manager, New Zealand Insurance Company. 
H. E. Mann, Agent, Hutchinson & Mann's Agency. 
Julius Jacobs, Agent, Jacobs & Easton Agency. 
Geo. Easton, Agent, Jacobs & Easton Agency, 
t Jas. Kip, formerly of the London Assurance Company. 
Samuel D. Mayer, City Agent, Commercial Union Assurance Company. 
H. L. RorY, Oaklaud Agent, Phoenix and Home Insurance Companies. 
Dave Rorick, Agent, American Central and St. Joseph Insurance Companies. 

C. P. Ferry, Inspector of Agencies and Adjuster, Portland, Oregon. 
tE. E. Evan, Agency at Chicago, 111. 

Oliver Hawes, General Agent, Connecticut Fire Insurance Company. 
S. O. Hunt, Agent, Jouathan Hunt, Son & Co's Agency. 

D. J. Staples, President, Fireman's Fund Insurance Company. 

Wm. Frank, General Agent, Hamburg-Magdeburg Fire Insurance Company. 

*Henry Balzer, Agent, Svea, North German, and Helvetia Insurance Com- 
panies. 

L. Beck, City Agent, Phoenix (London), British America, and Western 
(Canada), Insurance Companies. 

C. M. Nichols, Surveyor of the Board of Fire Underwriters. 

C. J. Van Tassel, General Agent, Continental, Niagara, and Commonwealth 
Insurance Companies. 

O. H. Cole, Adjuster. 

T. A. Mitchell, Agent, Jonathan Hunt, Son & Co's Agency. 

F. F. Stone, Agent, Lamar and Allemania Insurance Companies. 

C. Mason Kinne, Special Agent and Adjuster, Liverpool & London & Globe 
Insurance Company. 

P. Outcalt, Secretary, Western Insurance Company of California. 

J. C. Jennings, General Agent, Manufacturers' Insurance Company. 

Geo. E. Butler, General Agent, S. F. Agency Phoenix Assurance Company of 
London, British America, and Western Assurance Companies of 
Canada. 
-Chas. D. Haven, Secretary Union Insurance Company. 

E. W. Carpenter, Special Agent and Adjuster, Fireman's Fund Insurance 

Company. 

tW. N. Olmsted, 62 Cedar St., Eoom 10, New York City. 

Geo. W. Dornin, with Fireman's Fund Insurance Company. 

W. P. Thomas, Special Agent and Adjuster, South British and National In- 
surance Companies. 

W. W. Haskell, of firm Brown, Craig & Co. 

Louis Mel, Special Agent and Adjuster, Eoyal, Norwich, Union, and Lan- 
cashire Insurance Companies. 

J. P. Cox, General Agent, Standard Insurance Company. 



108 



t J. G. Edwards, Editor Coast Review, 320 California St., San Francisco. 

tA. Hill Jack, General Manager, National Fire & Marine Insurance Com- 
pany of New Zealand. 

R. E. Drake, Special Agent and Adjuster, Jacobs & Easton Agency. 

R. H. Naunton, Special Agent and Adjuster, Commercial Union Assurance 
Company. 

Jno. C. Staples, Special Agent and Adjuster, Hutchinson & Mann Agency. 

T. E. Pope, Special Agent and Adjuster, iEtna Insurance Company. 

S. E. Strickland, Special Agent and Adjuster, Butler & Haldan Agency. 

S. B. Riggen, Special Agent and Adjuster, Connecticut Fire Insurance Com- 
pany. 

Alfred Stillman. General Agent, Manhattan Fire Insurance Company, New 
York. 



* Deceased. t Honorary Member. 



PROCEEDINGS 



OF THE 



FIFTH ANNUAL MEETING 



OF THE 



FIRE UNDERWRITERS' 



Association of the Pacific, 



HELD AT 



San Francisco, California, Feb. 15, 1881. 



Printed by Order of the Association. 



GEO. SPAULDING & CO., STEAM BOOK AND JOB PRINTERS, 

414 Clay Street, San Franoisoo. 

1881. 



PROCEEDINGS 

OF THE 

FIFTH ANNUAL MEETING 

OF THE 

FIRE UNDERWRITERS' ASSOCIATION 

OF THE PACIFIC. 



The Fifth Annual Meeting of the Fire Underwriters 5 Associa- 
tion of the Pacific was held in the rooms of the Board of Fire 
Underwriters' of San Francisco, at 11 o'clock a. m., on the 15th 
day of February, 1881. 

George W. Spencer, Esq., President, in the Chair. 

Present during the meeting: Messrs. L. L. Bromwell, Geo. 
F. Grant, Z. P. Clark, Wm. Sexton, A. D. Smith, Geo. W. 
Spencer, E. Brown, Jas. D. Bailey, A. B. Gunnison, Geo. D. 
Dornin, H. W. Snow, E. E. Potter, C. T. Hopkins, A. P. Flint, 
Oliver Hawes, D. J. Staples, Wm. Frank, C. M. Nichols, C. J. 
Van Tassel, T. A. Mitchell, C. Mason Kinne, E. W. Carpenter, 
W. P. Thomas, W. W. Haskell, Louis Mel, J. G. Edwards, 
John C. Staples, W. G. Elliott and J. W. Staples. 

Minutes of previous meeting read, and no objection being 
made, were ordered to stand approved as read. 

TREASURERS REPORT. 

Fire Underwriters 1 Association of the Pacific, in account with J. W. Staples, 

Treasurer. 

1880. Dr. 

Feb. 17. Balance on hand and in Bank $ 180 93 

1881. Received for dues and fees 175 00 

Feb. 15. Received for sale of books 4 50 

$3G0 43 



1880 Cr. 

Mch. 15. Paid J. W. Staples, Secretary $50 00 

M A. P. Flint, bill for postal cards 2 20 

April 22. " J. G. Edwards, 2 copies Coast Review 50 

April 23. " C. C. Hine, Monitor $ Law Journal 8 20 

" " " Spectator Co 3 20 

11 " " Stephen English, for Ins. Times 3 20 

11 " " Postal Orders on above 30 

" 30. " Coast Review 2 50 

May 28. " H. S. Crocker & Co., bills, Mch. 9, April 17, 

May 17 5 00 

June 1. " D, Hicks & Co., bills, May 10th & 24th 8 75 

July 24. " Geo Spaulding & Co., bill,|June 21 160 00 

Nov. 15. " H. S. Crocker & Co., bill, Aug. 6 2 00 

Feb. 12. " C. W. Gordon, bill, Feb. 12 2 40 

Balance 112 18 

c 360 43 

Cash on hand $32 53 

" in Bank 79 65 

$112 18 

J. W. STAPLES, Treasurer. 
E. & O. E. 

No objection being made, the report was ordered approved as 
read. 

On motion, the Secretary was directed to file a voucher with 
the Treasurer for $50, as a very modest token of appreciation of 
faithful services rendered during past year. 

President Spencer then delivered his annual address, as fol- 
lows: 

PKESIDENTS ADDKESS. 

Gentlemen of the Association: 

Upon the occasion of this, our Fifth Annual Meeting, we are again met 
together to affirm our interest in its proceedings and encourage the future 
success of the Association. 

The objects of this organization are well understood. That good results 
have been accomplished and abuses reformed through its agency is believed. 
We know that many questionable practices that were at one time common on 
this coast are no longer a scandal to our profession or a reproach to the 
name of adjusters. Our coming together socially for the interchange of views 
and experiences has resulted in a friendly feeling towards, and just aprecia- 
tion of each other, that is bearing good fruit. 



That our success has not been so pronounced or our influence as great as 
was anticipated is due not so much to a lack of interest in the Association as 
to other causes. The field embraced in the Pacific department, although 
wide in extent, is limited in the matter of business. The officers of all the 
companies transacting business on this coast are located in this city, and 
every member of * this [Association resides in the immediate vicinity. The 
field is a common one, and our experience is largely the same. We form, as 
it were, one large insurance family; not perfectly harmonious, it is true; how 
many large families are? but living together, with no absent members to return 
at odd or shtted periods, with accounts of strange doings and interesting work 
in other fields. We see the same faces daily. We know the complaints of 
each of our ailing brethren and the remedies that they have taken or had 
prescribed for their relief. Information travels quickly and is soon the com- 
mon property of all, and "street gossip" discloses the hidden transactions of 
the uncommunicative members of our family. 

We have no outside material to draw upon for this Association. Its mem- 
bers are recruited from our own midst; and, while it is undoubtedly a most 
pleasant feature of our annual meetings that only familiar faces are present, 
we feel that it would add much to the interest of the proceedings, and that 
many novel and instructive papers would be added to our contribution were 
we able to call upon our friends from abroad. 

Appreciating this disadvantage that we labor under, I make the suggestion 
that such of you as are in correspondence with our friends in the East, will 
request some of them to furnish us with papers, to be read at our next annual 
meeting. I believe the request would be cheerfully responded to in many 
instances, and result in the presentation of new topics for our consideration. 
We dwell too much upon the same subjects year after year. Our thoughts 
and opinions have been expressed so frequently that they are known to you 
all. We must go abroad for new arguments, and obtain the experience of 
those engaged in a different field. 

Another cause that has contributed largely to dwarf the prominence of this 
Association, when compared with similar organizations elsewhere, is the fact 
that the Board of Underwriters of this city has ably performed a great part 
of the work that otherwise we should have taken hold of. 

The dissolution of the National Board of Underwriters was followed at the 
East by the wildest demoralization in the matter of rates, and'the abandon- 
ment on the part of many companies, of every safeguard considered essential 
to sound underwriting. We all know the result of the reckless competition 
of the ensuing years. Insurance literature for that period consists of one 
long continued lamentation over the demoralization and waste of capital and 
assets; and the list of stranded and shipwrecked companies furnishes instruct- 
ive if not agreeable reading. 

At such a time as this the value of an organization like ours is manifest. 
We are all familiar with the noble work accomplished by the Association of 
the Northwest in those years of darkness, and the strength and prominence 
it has attained in performing it. The meeting together of the ablest minds of 
the profession, the clear trumpet notes of warning that were sounded and the 
contribution of information and experiences pertaining to an extended field, 



have resulted in the reform that is now setting in, and giving us a series of 
the most valuable papers on topics relating to our profession. 

Upon this Coast we have not had this experience that they have passed 
through; and, although some of our members do not belong to the Board of 
Underwriters, I think you will all admit that to that organization is due the 
fact that rates have been maintained, and that the business of the past ten 
years has proved fairly profitable. 

But notwithstanding the fact that our field is not extensive, that the re- 
sources for membership are limited, and that we are relieved of much of our 
work by an older and more influential organization, there is still a great 
deal that we can do. 

Upon such of our members as are engaged more especially in the field, and 
are thereby brought into personal relations with agents, depends largely the 
success of our business. To your experience and information we look for 
thorough supervision of agencies, the inculcation of correct practices and the 
maintenance of the dignity of our calling. It is in the field that the best 
efforts of this Association are manifest, and in that direction we should in 
future give our best endeavors. Competition with us, as elsewhere, is sharp 
and close, and each of us is ambitious to obtain his full share of business. 
But let us compete for it honorably, each one exerting his best ability, and 
using every advantage he possesses to that end. It is this spirit that should 
animate us. Let the friendships that are formed at these reunions strengthen 
and grow in our business relations. Stand by each other. Defend the good 
name of a comrade, and not lend a willing ear to tales of wrong doings by a 
brother member. 

The reports of our various committees, embracing as they do so many im- 
portant subjects, leave but little for me to embody in this address. Our 
annual meetings taking place at this time enable us to review the results of 
the year just past. 

Without desiring to enter into the matter of statistics, which pertain more 
particularly to the report of the committee on that subject, it will perhaps be 
interesting to you to refer to the very valuable statement published in the 
Coast Review for February. 

The Insurance Commissioner's reports have furnished us with information 
of business transacted in California only; but this year we are enabled, 
through the enterprise of Mr. Edwards, to review the business of the entire 
Pacific Coast for 1880. 

We find from this statement that — 

Eight California companies received in premiums, $1,151,027.87, and paid 
in losses, $425,659.27, a ratio of 37.9; fifty-five companies of other States 
received in premiums $1,348,201.81, and paid in losses, $500,874.54, a ratio 
of 37.2; twenty-four foreign companies received in premiums, $2,155,943.30, 
and paid in losses, $746,810.54,*a ratio of 34.6. Total received in premiums, 
$4,655,172.98; total paid in losses, $1,673,344.35; a total ratio, 35.9. 

We have no data for previous years by which we can make comparisons* 
butUhe ratio of losses to premium receipts is probably lower than the average 
for the past ten years. It is not so low, however, that we can afford to reduce 



our rates, and it should be the aim of every member to maintain them at the 
present standard. 

In the matter of insurance legislation we are threatened with a number of 
most obnoxious bills during the present session of our Legislature. That 
they will not be adopted and disgrace our State by becoming laws, is the 
earnest wish of all who desire the public welfare and the protection of our 
interests. 

Senator Brumsey's bill, introduced in the Nevada Legislature, has passed 
the Senate, and is now in the hands of the Assembly. Its features are famil- 
iar to most of you, and are not objectionable to the majority of the companies 
transacting business in that State. 

Arizona has passed a valued policy bill, which is awaiting the signature 
of the Governor to become the law of that fertile territory. Should it be 
adopted a number of companies that are now hesitating about entering that 
field will undoubtedly establish their agencies without further delay (?). 

As Chairman of a Special Committee to solicit contributions to our library 
fund I plead guilty to an inexcusable neglect of my duties. I trust that the 
matter will not be allowed to drop, but that a more efficient Chairman will 
now be appointed, and funds obtained for this desirable object. We have a 
small but valuable collection of insurance works, and as they are unprotected 
by insurance, I make the suggestion that we take some of our own medicine 
in the form of a policy. 

Our Association now numbers sixty-three members, and from the renewed 
interest that has of late been awakened, I look for an increased membership 
and much progress during the current year. The reduction in the number 
of our regular meetings has been beneficial. A larger attendance was present 
at our last quarterly meeting, and a greater interest taken in the proceedings 
than at any of our monthly gatherings held during the past year. To-morrow 
evening we will give our first annual dinner, a new feature with us, which, 
I have no doubt, will prove a success and be the means of cultivating a spirit 
of good will amongst us that is one of the prominent objects of this Associa- 
tion. 

Gentlemen, I now invite your attention to the reports of committees and 
the addresses that will be presented to you. 

Mr. Clark— Mr. President, I have just learned of the death of 
the wife of Mr. W. L. Chalmers, one of our associates. 

President — gentlemen, your attention will be called to this 
subject later, when suitable recognition will be taken. I will 
now call on Mr. Bailey, the Chairman of the Committee on 
Forms of Policies. 



Mr. James D. Bailey then read his report: 



FOEMS OF POLICIES. 

Mr. President and Gentlemen of the Association: 

At our last annual meeting, Mr. Potter of the Committee on Forms of Poli- 
cies, presented for our consideration, as you will remember, a form of printed 
conditions for a policy, together with some pertinent remarks concerning 
certain changes embodied therein which he considered an improvement upon 
the older forms. To-day, under this same head, I shall ask your attention to 
a few remarks concerning the " written form;" and without going into elabo- 
rate details, which the brief time allotted for our various reports forbids, will 
simply call to your minds one special feature of the subject matter, namely, 
the growing necessity of a more careful wording of the written contract. 

At the annual meeting, in 1879, of the Fire Underwriters' Association of the 
Northwest, in his remarks on the future of the Association, Major C. E. Bliven 
said: " The forms to be used in the written or descriptive part of the policy, 
is a subject within the scope of our jurisdiction and daily work, and one that, 
while it has had some attention, has not yet received that which its great and 
growing importance demands." I recognize in this assertion, Mr. President, 
a fact that is of growing importance also to the insurance interest on the Pa- 
cific Coast, and one which we would do well to consider more in our daily 
practice. How often do we find, when called upon to adjust losses, a written 
contract so loosely worded as to almost preclude the possibility of an amica- 
ble settlement, and oftentimes in unwarrantable conflict with the printed con- 
ditions of the policy. The subject of adequate rates has been so persistently 
brought forward as the basis of insurance profit, that it has become almost the 
one idea as regards the insurance contract; but, I am inclined to believe that 
a more careful attention to the written form used to describe and locate the 
property covered by the policy, and a more direct understanding with the 
insured at the time of its issue, will save to our companies, in reduced losses 
and litigation, as much money as is made from the actual profit upon pre- 
miums, to say nothing of the increased satisfaction of the insured with the 
adjustment of his claim. When we come to reflect upon the general indiffer- 
ence with which the insured regard their policies of insurance, as compared 
with other important documents, we cannot, I think, fail to see the great ne- 
cessity on the part of the insurer for a nearer intercourse and more searching 
inquiry as to the nature, value and precise locality of the risk to be assumed, 
in order that the written portion of the policy may be in harmony with its 
printed conditions and at the same time fitly express the intention of both 
parties, leaving nothing to be inferred in the event of loss. 

Various theories have been advanced as to the cause of this indifference on • 
the part of the insured, and comparisons have been made showing with what 
grave attention deeds to property, mortgages, leases, etc., are scanned, often- 
times by expert legal talent, before final acceptance; but we must remember 
that all such documents are in their nature final, while the insurance policy 
represents simply a contingency which may never occur, and is, moreover, in 
many cases received at the hands of a broker, who is supposed, by the insured, 
to have supplied the insurer with full particulars as to the risk assumed. 



9 

But is this always the case? How many of the insured know what they 
agree to, in accepting a policy? Or, to look at the matter in a proper light, do 
they agree to anything, in many cases, beyond paying the premium? In life 
insurance, the applicant makes a formal application in his own behalf, and 
agrees to be bound by the statements he makes therein. In fire insurance, 
in a great measure, the application is rather the exception than the rule; a 
man wants a certain sum on his property and he tells the broker to procure it 
for him; a memorandum is filled up in the company's office, merely setting 
forth the amount required, with some vague statements as to ownership, loca- 
tion, &c, and the policy is made out in the usual order of business and deliv- 
ered to the broker; and so keen is the competition and so varied the brokerage 
interest as to commissiois and liberality of contract, that the care which 
should be bestowed on the written portion of the policy is, in a great measure, 
ignored, and the exact meaning of the contract oftentimes left for the adjuster 
to determine, who frequently finds, after the flames have lent their emphasis 
to the hitherto harmless document, that a certain modest little word or phrase 
has suddenly leaped into startling significance, and the assured having now 
found it convenient to read his policy, the adjuster is confronted with that 
vexatious problem under an ambiguous contract, how best to reconcile that 
which is in itself irreconcilable. The inevitable result is a humiliating com- 
promise or possibly a suit at law; but in either case, the feelings of both 
parties are generally anything but subdued, and the insured too often sus- 
pects the insurer of being guilty of sharp practice. 

By a reference to facts bearing upon the early history of underwriting, \* e 
find that disputes over the written portion of the policy were rare, and so dif- 
ferent a state of affairs from the present can only, I think, be explained by 
the fact that the insurer and the insured came more closely together, and the 
contract thus made was an expression of joint understanding; and greater care 
being taken to clothe the written form in language plain and clear, the insured 
was seldom mistaken or misled as to the burdens or duties imposed upon him. 
We know it to be a well settled principle of law that the words of a policy are 
to be taken most strongly against the insurer, upon the theory " that as the 
insurer makes the policy and selects his own language, he is presumed to 
have employed that which expresses the real intention of both parties as to 
the actual contract entered into, and has left nothing to be inferred or sup- 
plied by reference to extraneous matters." Of the importance, then, of hav- 
ing the transactions between the insurer and the insured placed on a mutually 
equitable basis there can be little doubt, and a reform in this direction would 
be of great value. It would place the company and the policyholder in a 
proper position towards each other, and would conduce to a more careful 
study of the policy by the one, and a better understanding by each, of their 
respective duties and obligations, thereby decreasing, perhaps, in some meas- 
ure, that obnoxious State legislation which is gradually creeping upon the 
insurance interest in the shape of laws calculated to draw sharp lines between 
the insurer and the insured, instead of harmonizing the interests of both. 

Mr. Dornin — Mr. President, it has been suggested that it 



10 

might be in order for this Association to make some recognition 
of the work by Senator Brumsey, in maturing and finally passing 
so excellent a bill as the measure which was embodied in your 
report, and I make the motion that the President and Secretary 
be requested to telegraph to Senator Brumsey about as follows: 

** The Fire Underwriters' Association of the Pacific, now holding its annual 
meeting, beg to congratulate you on the passage of the bill introduced by 
you concerning insurance companies. Nevada deserves credit for placing 
upon its statute books so commendable a measure." 

The motion was duly seconded, carried, and the above tele- 
gram sent as suggested. 

On motion, adjourned until 1.30 p. m. 



Pursuant to adjournment, the Association was called to order 
at 1.30 p. m., President Spencer in the chair. 

President — There are several new faces which were not here 
this morning, and I shall request Mr. Bailey to read his address 
again for the benefit of those who were not here at that time. 
Whereupon Mr. Bailey read his address. 

President — I see we have with us the Chairman of the Com- 
mittee on Local Agents. We looked for his report this morning, 
but were disappointed. We shall be pleased to hear from Mr. 
Sexton. 

Mr. Sexton, after a few complimentary remarks, on Mr. 
Bailey's report, delivered the following address on 

_ LOCAL AGENTS. 

Mr. 'President and Gentienrenof the Underwriters' Association of the Pacific: 

Your Committee on Local Agents wish to say that this question has been 
written on so often by leading insurance men of the country, and has been 
so especially well handled by the former committees of this Association, that 
we cannot hope to offer anything either new or instructive, and only attack 
the subject because a report is expected. 

The very able report read at our last annual meeting by our worthy chair- 
man, says, " The subject of local agents is a broad orie. " This we fully endorse, 
and add that, under the agency system of fire insurance as now conducted, 



11 

the whole superstructure rests on the local agent. He represents its pur- 
poses and benefits to the community, solicits and surveys the risks, sees to 
the value of property and proportion to carry, judges of the moral and phys- 
ical hazard, and collects and forwards the premiums — at least a majority of 
agents do, and all would if of right sort of men and properly educated. 

The lady who, when asked by a colporteur if her husband was a Christian, 
replied, "No, sir; he is an insurance agent;" may not have been joking, as 
an agent, whether special or local, has enough rough experiences to knock 
all early inbred piety out of him. The special, being bumped over rough 
roads on rickety stage wagons or backbreaking buckboards, rested in smoky 
bar-rooms, stowed in cold bedrooms in beds ill-kept and sheets looking as if 
they had been in use on the Yuba, catching slickens, finding his company's 
best agents captured by the enemy and his good risks gone where the wood- 
bine twineth, can hardly be expected to praise Him from whom all these 
blessings flow. 

The local agent having gone to church, played billiards, talked sweet and 
laid awake nights to secure a good premium-paying risk, and has the applica- 
tion returned with the reply that the company don't write powder mills, don't 
have the proper Christian feeling as he sees a commission that would buy 
Mrs. A. a good Christmas present or a spring bonnet, vanish because the 
home office don't understand the merits of this particular powder mill. 

The manner of appointing and instructing local agents might be divided 
under as many heads as an ordinary sermon, but we will only try to point 
out some of the shortcomings and failings in selecting them. Under instruc- 
tions the special starts for Smithville. On arriving, finds only one store in 
the place; makes a bee-line for it, intending to interview the proprietor, won- 
dering at the same time if he will be successful in placing his agency in the 
right kind of hands, and will his be the only agency in the town. The latter 
question is settled by finding the front of the store ornamented with the in- 
surance signs of all nations — all kinds of specimens of the painters' art, from 
a Yo Semite view to a Maori picnic, with all the figures known in animal life 
or heraldry thrown in, and capital and assets represented to an amount about 
equal to the National debt. An interview with the insurance representative 
of Smithville discloses that the special of the Grizzly Bear dropped in one 
day while the mail was being changed, left his card and promised to send 
an agency outfit, which arrived in* due time, and all except the sign is stowed 
on an upper shelf or under the safe. Next came the special of the Ameri- 
can Eagle, who, upon seeing the sign of the Grizzly Bear, suggested that the 
insurance representative take his company; he did so, and the sign is on the 
front of the store and supplies under the safe to keep company with those 
of the Grizzly Bear. Next came the specials of the Unicorn and Kangaroo, 
whose signs are nailed on the building and supplies shoved under the safe 
to keep company with the others. 

Upon further interviewing the Smithville local, the special learns that insur- 
ance in that town don't pay; he has not insured anybody yet; could do lots 
of business, but the people don't come after it; thinks it would make busi- 
ness better to have a fire; they have not had one there since the town burned 
some six years ago, and then some of the people who lost their buildings 



12 

did not get the whole amount they were insured for, and he does not think it 
was fair; the hotel burned was insured for $4,000, had cost $6,000 ten years 
before; had not been painted but once since it was built, and then on outside 
only. Mr. Jones, a contractor and builder, one of the most reliable men in 
that neighborhond, offered to rebuild it for $3,300, at which price he would 
make a fair profit, and this was all the company would pay, the adjuster even 
wanted to deduct something for the difference between a new and an old 
building, but hotel owner would not stand it; but insurance representative 
don't understand why the Company should not pay the sum, 84,000, as they 
agreed to, and had been paid for. The fact that the building could be re- 
placed for less than that sum was none of their business. No one saw the 
owner set fire, though it was not paying, and there were strong suspicions 
against him. 

A half-hour talk convinces him that the contract was one of indemnity, 
and that when the assured got the amount of his loss he, if honest, should 
have been satisfied. 

Does the agent carry any insurance on his stock ? 

Oh, yes. 

What company? 

Don't know; wholesale merchant in San Francisco attended to it for him; 
has not seen the policy; does it cheaper than his own company will, besides 
he did not have any bother making a diagram, or answering a whole row of 
questions about amount of stock on hand, sales or purchases. 

Did he not send a diagram of his building and exposures? 

No. "When he was insured he happened to be in San Francisco; was asked 
by the book-keeper of wholesaler if his store was detached, said yes; sup- 
posed that detached meant no building adjoining; no more questions were 
asked. 

Did he not say anything about the frame saloon 20 feet south, or the frame 
hotel 30 feet north, or the livery stable across the street 45 feet distant, or 
about the cotton lining, or the stove-pipe running through it and through the 
roof? 

No; was'nt asked; answered no question excepting that the store was de- 
tached; did not sign an application; don't know what company, or what kind 
of a company, the insurance is in. 

• What would he do if a fire started in the hotel, stable, saloon or his own 
store? 

Shut the doors and let it burn. 

Why not try to save some of his stock. 

That would void his insurance, make him trouble, and the value of any 
stock saved would be deducted from his policy; did not want to be bothered 
with adjusters; he don't pay for insurance to save goods for the companies. 

Another half hour's explanation shows him that any stock saved belongs to 
the assured, and that the company pays the amount of the loss up to the face 
of the policy; he didn't know this, was glad Mr. Special called; what com- 
pany did he represent; could he write at less rates than other companies and 
give longer credit; he might get some risks if he could take them lower and 
give a longer credit than other companies. If so, would take the company 



13 

and give it his own risk at same rate as now carried; thinks the exposures, 
cotton lining and stove pipe, don't cut anyfigure; has full confidence in his 
wholesale friend in the city, and if a fire occurs he will see that he gets his 
insurance. The company has taken the premium, and if his store burns 
ought certainly to pay for it; thinks rates are too high in the country, and 
that the country people have to pay for city losses. 

In vain does the special refer to the records of the insurance companies on 
this point; can't convince him that he is wrong. 

Special concludes to visit Smithville again before planting his agency. 

Such is an example of the perplexities of attempting to place an agency in 
some of the small towns. In nearly all of them, and in the larger towns also 
it is not hard to find the agent who could do all tho business if he could only 
underbid his opponents. Any merchant could undersell his brother mer- 
chants if he sold below cost, but a little time would put the sheriff's lock on 
his door, and a little time will put the name of the insurance company on the 
death roll that sells its policies below cost. We also find the pompous agent 
who could do all the insurance business in the county, but the people don't 
come in — they don't come in, sir. 

Fortunately for us and for the companies we represent, we find in every 
town of any size agents whose business methods and knowledge of fire under- 
writing would do credit to managers, general or special agents; men who can 
use sound logic when discussing and advocating the question of insurance to 
their patrons, and the insuring public, who, when asked what benefit insur- 
ance bestows upon that portion of the community who pay premiums and 
have no losses, explains that insurance enables the merchant with a small 
capital to purchase and carry a much larger stock to accommodate customers, 
than he could without the security given by insurance. That it endorses his 
credit by taking the risk of fire. It assists the citizen to secure a home by 
becoming security for a large portion of the purchase money or cost of build- 
ing. That it helps to build cities, improve farms, sail ships, move crops, 
serves as an endorser for not less than $200,000,000 on this Pacific Coast 
to-day. That it enables the wheat, wool and wine growers to carry crops 
over for a better market, obtaining for them advances by becoming security. 
That it furnishes capital to farmers and buyers to raise and handle the enor- 
mous grain crops of our valleys from the time the ground is seeded until the 
grain is placed in the market, and furnishes competition through which the 
producer gets the very highest price by becoming surety for payment of loans, 
a warehouse receipt and an insurance policy being considered about equal to 
bullion as collateral. That it furnishes to prospectors security by which they 
can Obtain capital to erect works and mills to extract the mineral wealth from 
our mountains; furnishes security by which the manufacturer obtains capital 
to carry on all kinds of manufacturing enterprises. In short, that were it not 
for the security furnished by insurance, commerce would come to a stand 
still. 

He explains the principles of fire insurance as set forth in the regular form 
of policy, and shows that the conditions or instructions therein are the law of 
the contract, and are put in the policy for the benefit of the insured, that he 
may keep informed of his rights and not void his insurance. 



U 

That the condition that the loss shall be payable in 60 days from and after 
proofs of loss have been filed, gives the assured notice that he may make up 
and file his proofs of claim or loss without waiting for the company's adjuster, 
and at end of 60 days demand his coin. This gives the company time to in- 
vestigate the cause of loss, and if fraud is discovered, to prepare to contest 
the claim. (Your Committee would here remark that, though nearly all fire 
policies now issued contain this 60 days' clause, it is not generally enforced; 
in fact too many losses are paid immediately upon adjustment and without 
discount.) 

That the conditions in relation to losses which occupy a large portion of 
the "small print," often sneeringly referred to by men who prefer to use 
three hours criticising (abusing) them to one hour's study, are instructions 
to the assured as to the manner and form of making up his claim. They are 
so plain that there is no need of a claimant making a mistake or going wrong, 
and being given and agreed to in advance by the company are without ques- 
tion accepted. This saves the claimant the expense of counsel or the trouble 
of reading up law of contract; that the condition showing property covered or 
not covered under certain classes of insurance gives assured notice that a 
policy on one class of property does not cover another, and if he has any 
property not covered which he wants insured, he can find accommodating 
agents who will attend to it for him. 

That the condition that a fire policy does not cover damage by lightning 
unless fire ensues, and then the damage by fire only, gives him notice to 
procure insurance against lightning if he wants it. 

That the condition stating that if the property be so occupied as to increase 
the risk, or becomes unoccupied and so remains without permission, gives the 
assured notice that a policy on a building while occupied as a dwelling would 
be void if the building were occupied as a livery stable or Chinese wash- 
house, or became vacant, and warns him to call on the agent and have his 
contract changed to suit the changed condition of the property. If this con* 
dition were not in the policy, the holder could not recover for a loss on 
building occupied as a livery stable or Chinese wash-house, under a policy 
covering on a dwelling. 

That the condition making it the duty of the assured to use his best efforts 
to save and take care of property at and after a fire, and fixing the measure of 
loss or damage at the actual cash value of, or cost of replacing or repairing the 
property lost or damaged at the time of the fire, gives the assured notice that 
it is his duty and his interest to save as much as possible, and to take care 
of that saved, as at least one- quarter of his risk is not insured, and he will 
have that much clear if saved, with the loss on the other in full, and that his 
first saving is for himself. 

That the condition under which the policy becomes void through fraud or 
misrepresentation only repeats the law that fraud vitiates all contracts. Gives 
him notice that his statements made in relation to the property when apply- 
ing for insurance must be correct; that fraud, misrepresentation or conceal- 
ment on the part of either party, to an insurance or any other contract, of 
any material fact, or circumstance which should be known to the other party, 
makes such contract void in law. 



15 

That the condition that additional insurance will void the policy unless 
agreed to by all companies interested, is to prevent over-insurance, and is in 
accordance with public policy, and if not for the direct benefit of the assured, 
is certainly for the protection of adjoining or adjacent property owners. 

That the condition that property is only insured in the locality stated as 
described in the policy, unless removed to save it in case of fire, gives the 
assured notice to call at the office and have the change endorsed on his policy, 
that the company insuring him may have notice to procure reinsurance if nec- 
essary for their customer's security. 

That the condition that a change of ownership voids the policy, gives the 
assured notice, of what he ought to know, that a contract with A is not a con- 
tract with B, and a company might insure property owned by A on which 
the community would not want an insurance carried for B. 

That the condition that gunpowder, nitro-glycerine, phosphorus, or the 
other dangerous compounds named in fire policies, shall not be kept on premi- 
ses or in stock insured without permission endorsed on the policy, is for the 
information of the million that such compounds are dangerous, and if such 
articles are necessary in the assured 's business or vocation, he shall inform 
the agent and get the benefit of the companies' experience, as to where and in 
what quantities they shall be kept. 

That the provisions for appraisement are to expedite settlements, giving 
the assured a short and ready remedy for the settlement of any dispute, and 
is as much for his benefit as for the company. 

That all and any conditions therein which assist in getting at the exact loss 
and save the company from being swindled, are for the benefit of the assured, 
because all expenses and losses must be paid out of premiums collected, and 
the community is interested in the company not paying fraudulent claims. 

He shows to his clients that the present form of policy is satisfactory to 
merchants and business men who insure millions, and is only found fault 
with by persons of small business experience, or by persons who were baulked 
in trying to take advantage of an insurance company in case of loss. 

He further explains to carpers who find fault with the large percentage of 
expense, as shown in company's statements, that indemnity has to be manu- 
factured, that the premiums represent the raw materials and the loss-paying 
ability the manufactured article, and that the cost of producing is not any 
greater than in any business, and if Mr. Carper thinks he can get rich at in- 
surance, he can get plenty of chances to invest in stock or to act as agent. 

In answer to the claim set up by the advocates of valued policy laws, that 
when a man pays for a certain amount of insurance on property and the 
property is totally destroyed, he should receive the face of the policy, whether 
the property was worth that much or not. He shows that the rates of pre- 
mium charged are based on the experience of companies, showing that only 
a certain per cent, of fires are total losses, and are not based on the probabil- 
ity of all losses being total, otherwise rates would have to be largely increased; 
and further, that when the assured gets the actual amount of his loss and all 
property saved, he receives all that the laws of right and public policy should 
allow him. 



16 

fie attends to soliciting for insurance at all hours — every hour his time, 
every place his office — knows every person whose property is not insured, the 
value thereof and rate thereon with the amount of insurance it should carry; 
sees that the applicant is covered on all his property to the extent of two- 
thirds or not over three-fourths of actual cash value. Don't figure cash value 
at cost years ago, but makes deductions for wear and tear, want of adapta- 
bility to present uses, reduced cost of materials and labor, and such other 
causes as would reduce its market value; informs the assured that he is his 
own insurer for the portion not covered, and that in saving it in case of fire 
he saves it for himself, is not afraid to inform the assured of his rights as 
well as his duties in such cases for fear of losing a point in an adjustment; 
he places separate amounts on building, fixtures, furniture, stock and other 
property, and does not cover two classes of property in two places under one 
item. 

He makes his survey and application so plain that there can be no mistake 
as to the property intended to be insured, and in event of loss has the saved 
property taken care of, and helps the adjuster and claimant to get at the 
exact damage. He don't ask the applicant how much insurance he wants; 
keeps on the safe side; sees that a fire shall not prove a god-send to any of 
his customers, or that the adjuster for his company gets a reputation for mak- 
ing salvages out of total losses; knows that the company prefers paying a 
total loss when the insured property is totally destroyed, to having a salvage. 
Knows that in all cases where the loss is less than the insurance that the as- 
sured has received too much, as he should have borne not less than one- 
fourth of the loss, instead of not bearing any. Knows that salvages made in 
total losses are more generally due to slovenly and careless underwriting than 
to any merit in adjusting. 

He never over-insures anyone; believes in that part of the Lord's Prayer, 
" Lead us not into temptation." Shows his clients that insurance that insures 
is a business necessity, and the cheapest is not always the most economical 
in the end; that agents must be paid; that managers must live; that capital is 
entitled to some return for the risk taken, and where capital is risked and 
policies properly written, an adequate rate must be had, and insists upon 
getting it, that his company may be prepared for the day of loss. 

He grants no special privileges without getting an additional premium, ar- 
guing and believing that he is not justified as a business man (if he would 
be sustained by his company) in giving that security that is paid for by all to 
his friend without pay; that in doing so he would be giving away that which 
belongs to another. 

He explains that there is something more in insurance than the too popular 
idea that it only means, taking an application, issuing a policy, collecting a 
premium and cinching the assured in case of loss. 

He does not divide his commissions; does his work well, believes that the 
laborer is worthy of hire, and sees that he gets it; fights shy of companies 
paying big commissions; knows that extravagance in any business leads to 
insolvency, and prefers a steady job at reasonable pay as agent for a company 
that is managed to keep. 



17 

He knows that insurance is a part of the expense of conducting all kinds of 
business, and any and all burdens in the way of expenses of management, 
taxes or adverse legislation become a direct tax on the community; some few 
may suppose that by not insuring their own property they escape this tax, 
but they pay (all the same) their share on everything they eat, drink or wear. 
He shows that the rates of insurance are based on good property, with 
moral and physical hazard good; also, that property cannot be rated as low 
in small cities as in large ones, because firemen with small experience often 
throw ten times as much water on a stock of goods as there is any necessity 
for, making a damage of more thousands in a small city than hundreds in a 
large one from same sized fire. 

He believes, and acts on the belief that the word of an insurance agent is 
worth as much as that of any other man, and when he gives his word to his 
competitor it is respected and relied on. 

He believes that the inherent physical hazard in risks he takes will, in some 
of them, sometime and somewhere break out, and don't flatter himself that 
all of his risks are fire-proof. He examiness stove-pipes where they pass 
through roofs or through ceilings into chimneys; cautions the assured against 
putting cold ashes in barrels or wooden boxes stored in the angles of build- 
ings, fences, basements or sheds (cold ashes cause as many accidental fires as 
empty guns do accidental deaths) ; against turning a coal oil lamp down below 
a half flame, to heat the tubes and generate a gas that is not consumed, and 
causing explosion; against keeping turpentined or oiled rags used for cleaning 
paint, or rags used for mopping up paint or oil in or around any building; 
against using saw-dust, rice, chaff or other combustible material to soak up oil 
drippings in stores, to generate spontaneous combustion and add one more to 
the many mysterious fires; against allowing matches to be kept where mice 
can make a meal off of them, or store them away between studding for win- 
ter food (fuel) ; against allowing hot air or steam pipes to come into contact 
with wood; against using sawdust in spittoons in stores or offices, to take fire 
from a partly consumed cigar or that invention of the enemy of mankind, the 
cigarette. 

He attends to renewals in time to make all necessary changes; delivers poli- 
cies as soon as ordered, and sends account current and coin to balance at end 
of month. 

The all-important question is, how to secure a good agent. The ancients 
had a belief that the statue as a statue existed in the marble block before it 
was touched by the artist's chisel; but they were always careful to have a 
perfect block. Get a good man and he will make a good agent; the question 
with us as to how to get a good man too often boils down as to how to get 
any kind of a man. 

It would be better if specials would use judgment, and when asked by Mr. 
President or Mr. Manager why we do not have an agent at Smithville, give 
him the best of all reasons; that is, that we can't get a man to make one of. 
We must know that each of us can only secure a certain share of the going 
business; that no one company or agenry can get it all; that if one of us get 
the model agent in a town and we get more than our share, that in the adja- 
2 



18 

cent town some other cornpauy will draw the lucky number and take the 
cake. We can, however, work with patience, and when we make an appoint- 
ment get a sensible, reliable man who, when educated, will be a good agent. 

In concluding, your Committee would repeat the advice given in arformer 
report. In selecting agents, "Let your standard be a high one, and your ap- 
pointment reflect credit alike on your judgment and associations. Find a 
reputable person, whose name is a guarantee that his acts w r ill cause you no 
shame. If you can interest him in the work, appoint him. A good man 
makes a good agent; an intelligent man an intelligent agent; a superior man 
a superior agent; and per contra, a weak, cunning, dishonest or confidence 
man, a correspondingly undesirable agent." 

All of which is respectfully submitted. 

Wai. Sexton, 
T. A. Mitchell, 
L. Mel, 

Committee. 
Applause. 

President — The report of the Committee on Losses and Ad- 
justments is next in order. No response. 

President — The report of the Committee on Legislation and 
Taxation will now be received. 

Mr. Thomas — Mr. President, I am directed to read the follow- 
ing letter from the Chairman : 

LETTER FEOM ME. W. J. CALLINGHAM. 

Mr. President and Gentlemen: 

It is with extreme regret that I find at the last moment that I am the 
Chairman of the Legislative Committee of this Association, and in conse- 
quence thereof something being expected from me upon insurance legislation 
in general. The time, however, will not permit of a lengthy review of the 
very many insurance bills introduced into the Legislature of this State during 
the present session, some of which would be desirable, but the majority are 
iniquitous and would become oppressive upon the assured in the way of 
increased rates if they became laws. The valued policy measures are the 
most prejudicial to both underwriters and the honest insuring public, and 
cannot be condemned too severely as laws calculated to promote fraud of the 
worst kind, by the criminal destruction of propeity from which loss of life 
may in many cases be the result. I am pleased to be able to state to this 
Association that every legitimate means will be taken by the Legislative 
Committee of the Board of Underwriters to defeat these incendiary laws — 
so-called valued policy laws. The Sub-Committee of the Legislative Com- 
mittee, consisting of Messrs. Dornin and Bromwell, made \evy able arguments 
before the Committees on Corporations of both Houses, which I am sure will 



19 

have great weight when the bills come up for passage. These are plausible 
and taking measures with the ordinary legislator, and cannot be protested 
against too strongly by underwriters, which is as much in the interest of the 
insuring public as that of insurance companies. I very much regret that time 
will not permit of a more lengthy treatment of this subject, of which so mnch 
could be said that would be interesting. I must beg, however, that you will 
take the will for the deed, by promising better things in the future. 
With much respect, 

W. J. Callingham. 

On motion, Committee were given more time to report. 

President — We will now listen to the report of Committee on 
Fire Department and Water Supply, Col. Kinne, Chairman. 

Col. Kinne — Mr. President, I would state publicly and offi- 
cially, that this is the first time I was aware that I was ap- 
pointed on such a Committee. There was some talk, I remem- 
ber, about such a thing, but I never understood that I was of 
that Committee. 

Committee granted more time. 

President — The report from the Committee on Statistics is 
next in order. 

Mr. A. P. Flint then read the 

REPORT OF COMMITTEE ON STATISTICS. 

To the Fire Underwriters' Association of the Pacific: 

Gentlemen — Thanks to the arduous labors of our able predecessors, your 
Committee have had a comparatively easy task, taking the figures furnished 
by the Commissioner's Report, and the diligent editor of the Coast Review, 
and adding them to the tables pr?pared by previous committees. We are, too, 
under obligations to the reports of the Fire Patrol and Fire Marshal Durkee, 
for the receipts and losses of this city. We have continued the admirable 
system of tables adopted by a former committee, believing them to be ample 
in detail and showing at a glance the results of the business. 

We are enabled, for the first time, to present the statistics of all the busi- 
ness reported to the companies and agencies having headquarters in San 
Francisco. 

We invite the attention of the Association to the tables attached hereto, 
including the list of companies admitted to and withdrawn from the State in 
1880. 

For California we show a gain in the receipts for the year, and the ratio 
of losses has not increased. 

Our tables for the business outside of California show a much larger pro- 
portion of losses to receipts. 

The ratio of losses to receipts in California being 32.5 per cent., and out- 
side 48 per cent. And in this connection we beg to say that from facts laid 



20 

before the Nevada Legislature, we find returns from twenty of the leading 
companies doing business in that State, the past ten years, show a net loss of 
$528,089; and there is reason to believe that full returns from all the compa- 
nies would show a still more disastrous state of things. And yet the Legis- 
lature believes insurance companies should be taxed for the privilege of losing 
their money there. 

The returns for the year 1880, while they sbow.no great increase, do indi- 
cate clearly that the "hard times" complained of have spent their force, and 
that the return tide of prosperity has commenced to flow. 

The statistics from all the Trade Associations indicate a healthy condition 
in every branch. And the outlook for 1881, for the insurance interests repre- 
sented by us, is bright and hopeful. 

During the year 1880, the following named companies have been admitted 
to transact a fire insurance business in this State: 



Fire Insurance Association, of London. 

General Reassurance, of Paris. 

Lion Fire, of London. 

Manchester Fire, of Manchester. 

Metropole, of Paris. 

Phoenix Assurance, of London. 

EASTERN. 

Commercial Fire, of New York. 

Fireman's, of Baltimore. 

New Hampshire Fire, of Manchester, N. H. 

New York City Fire, of New York. 

Union of Philadelphia, of Philadelphia, Pa. 

Mercantile, of Cleveland, Ohio. 

LCCAL. 

Oakland Home, of Oakland, Cal. 
During the year 1880, the following named companies ceased to do business 
in this State: 

FOREIGN. 

La Caisse Generale, of Paris. 
Scottish Commercial, of Glasgow. 
Paris Underwriting Association, of Paris. 
Standard, of New Zealand. 

EASTERN. 

Fairfield, of South Norwalk, Conn. 
Faneuil Hall, of Boston. 
Home, of Columbus, O. 
Northern, of New York. 
Lycoming, of Muncy, Pa. 
Manufacturers, of Newark. 
Mercantile, of Cleveland, Ohio. 
West hester, of New York. 
St. Nicholas, of New York. 
Trade, of Camden, N. J. 
San Francisco, Cal., Feb. 15, 1881. A. P. Flint, 

W. P. Thomas, 
Z. P. Clabk. 
Committee, 



42 3 



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o 

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GO 

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w 

Ah 


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o 
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oq 

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$339,376 
469,070 
887,090 


CO 

m 
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OS 
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co 


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956,990 

1,667,010 

$3,433,004 


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$341,879 
442,062 
905,725 

$1,689,666 


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514,928 

'761,285 

$1,743,338 




06 

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875,331 

1,768,282 


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$404,547 
421,382 
936,048 

$1,761,977 


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928,985 

1,844,609 

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452,928 
938,588 

$1,867,837 


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1,638,415 

$3,711,618 


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22 



Fire Insurance Business in California during* Ten Years. 
1871 to 1880, inclusive. 

TABLE SHOWING RISKS WRITTEN, PREMIUMS, LOSSES, AVERAGES, &c. 





Number of 
Companies. 


Risks 
Written. 


Aver- 
age • 
Rate. 








. 


Per 


Year 


o 

as 

O 
g 


CO 

Cb 

3 


o 

2. 
ck;' 
B 


o 


Fire 
Prem'ms. 


Av'rage 
Pre- 
miums. 


Fire avr'age 
Losses. Loss. 


Cent. 
Loss TO 

Pre- 
miums. 


1871.. 
1872.. 
1873.. 
1874.. 
1875.. 
1876.. 
1877.. 
1878.. 
1879.. 
1880.. 


5 

6 

7 
7 
7 
7 
7 
8 
7 
8 


11 

22 
34 

48 
50 
57 
56 
55 
64 
60 


8 

10 
11 
13 
17 
22 
26 
28 
28 
30 


24 
38 
52 
68 
74 
86 
89 
91 
99 
98 


$185,218,963 
200,178,417 
184,545,576 
197,432,160 
221,653,672 
237,013,037 
256,893,278 
238,639,041 
228,964,659 
252,179,530 


1.08 
1.19 
1.58 
1.59 
1.58 
1.57 
1.53 
1.48 
1.50 
1.43 


$1,994,522* 
2,388,543 
2,926,632 
3,139,679 
3,493,381 
3,711,618 
3,933,920 
3,539,522 
3,433,004 
3,620,267 


$83,105 
62,826 
56,281 
46,171 
47,207 
43,158 
44,201 
38,896 
34,676 
37,962 


$l,201,612f 

667,704 

777,718 

783,303 

• 987,966 

1,269,397 

1,219,900 

921,224 

1,110,344 

1,175,671 


$50,066 
17,571 
14,956 
11,519 
13,350 
14,760 
13,706 
10,123 
11,215 
11,997 


*60 
28 
26i 
25 
28 
34 
31 
26 
32 
32 



* Report of 1878 gave Premiums on Risks in Force, instead of on Risks Written, hence the 
variation in these figures. 

t Not including $286,508 paid by the Pacific and Occidental for losses of the previous year. 



Fire Insurance Business on the Pacific Coast, exclusive of 
California, for the Year 1880. 

TABLE SHOWING RISKS WRITTEN, PREMIUMS, LOSSES, AVERAGES, &c. 





Number of 
Companies. 


Risks 
Written. 


Aver- 
age 
Rate. 


Fire 
Prem'ms. 


Aver'ge 

Pre- 
miums. 


Fire 

Losses. 




Per 


Year 


a 

9 


CD 

2 


•=1 

o 

2 


o 


Av'rage 
Loss. 


Cent. 
Loss TO 
Pre- 
miums. 


1880.. 


8 


58 


29 


95 


$45,975,161 


2.25 


$1,034,905 


$10,894 


$497,673 


$5,239 


48 



There are three companies (two Eastern and one Foreign company) not 
credited with business outside of State of California. 

The amount of wrisks written, and premiums thereon by companies rein- 
sured, is embodied in the returns of the companies reinsuring said companies- 
retiring from the State. 



23 

Mr. Flint — I wish to say, gentlemen, in addition to this, that 
it was the desire of the Committee to have the report of all in- 
surance companies throughout the United States, but from the 
Insurance Journal of Hartford, which is the most reliable upon 
statistics that we have, we find that it is impossible, even at this 
day, to get the correct statistics for 1879. 

The Finance Chronicle, of London, gives a statement of the 
business of the United States, but it was so deficient that the 
Hartford Insurance Journal answered, and they report that there 
are about 1039 companies doing business in the United States, 
and they can only get reports of 184, so any report would not be 
a correct report; therefore the Committee have preferred to let 
the matter drop. 

The insurance business of the United States, amounts to about 
one hundred million dollars a year, and the losses are about 
sixty million dollars each year, which shows the amount of busi- 
ness represented by all the companies. 

Mr. Dornin — Mr. President, I do not wish to interject any 
parenthetical remarks, but I wish the Committee on Statistics 
had gone a little further and eliminated from the state and coun- 
ties the business of San Francisco, more particularly the grain 
warehouse business, in order to show that the loss ratio on Cali- 
fornia business instead of being 32 per cent., will show much 
nearer 80 per cent. Our statistics, as we get them from the In- 
surance Commissioner, are very deceptive; we forget that San 
Francisco contributes fully one-half of the whole premiums of 
the State. 

The losses from San Francisco have been exceedingly small, 
and in consequence of that, it goes out to the world that under- 
writers in California are making such an extraordinary profit on 
their business, and I believe it is demoralizing to our business 
when we attempt to adjust it, judging from the statistics of the 
Insurance Commissioner. 

The losses of California run up to near 50 per cent., while in 
the Pacific Coast business you interject the business of San 
Francisco, but if you take out the business of Oakland and the 
county of Alameda, which for various reasons has been very 
profitable, and the business of Sacramento, or limit it to the 
business of the bay counties, I question whether there has been 



24 

any profit outside of this little territory, that is, taking out the 
grain business which this year has been very large and profit- 
able, but outside of that, the business will not bear careful 
scrutiny. 

Mr. Flint — Mr. President, I beg to say in answer to Mr. 
Dornin, that the report which the Committee annexed to their 
report goes into this subject with considerable detail, and we 
thought it was not necessary to repeat that, as it would he tau- 
tology. 

Now with reference to other special business, I wish to say 
this, when undertaking to get statistics with reference to Nevada 
business, the Committee were met with a prompt denial. We 
thought of making statistics on the wheat business, but there 
was such a disposition on the part of some officers of companies 
to withhold the figures of certain kinds of business that we could 
not get the whole, and therefore had to present only a part. 

Mr. Dornin — Mr. President, I understand that we get the 
statistics from each company, and the companies declined to 
give up their records. There are statistics of the Insurance 
Commissioner, of the Fire Department and Fire Marshal. My 
point was this, not to let it go out as it has for several years 
past, that the percentage of profit is so exceptionally large in 
California. The grain business should be taken out of these 
statistics — it counts very largely in our returns. For we are 
constantly met with that remark of the country agent that Mr. 
Sexton alluded to, that the country merchant has got to con- 
tribute to pay for the city losses, and we ought to show the 
country agent that the city business, for reasons given, has been 
exceedingly profitable, and the country business hardly pays its 
way. If you take the country business, say for the last five 
years, I think you will find it has made no money during that 
time. 

Mr. Clark — Mr. President, the Chairman of this Committee 
did not read the tables of statistics, as they are lengthy, and you 
all, no doubt, desire to subject them to close personal study. 
They are a continuation of the tabulated statements started by 
your former Committee, with a valuable addition showing the 
entire Coast business. It would be impossible to separate the 
business of the Bay counties from that of the State with the 
data before your Committee. 



25 

President Spencer — I bear Mr. Dornin out in his remarks. 
When Senator Brumsey was about to introduce his bill in the 
Legislature, he asked Mr. Brornwell and myself to obtain the 
returns for the past ten years of all the companies doing 
business in Nevada. There were a number of companies doing 
business there ten years ago that have quit since. Senator 
Brumsey telegraphed for these statistics, and I sent a report of 
twenty companies, as much as we could get of them, and the 
returns of those companies show a net loss of over $500,000. 

I know that the reason some of the companies refused to give 
their statements was, on account of their not wishing to let it be 
known what their losses were, and I know if we had a report of 
all the Nevada business for the past ten years, it would certainly 
show a loss. 

Mr. Flint — Mr. President, I would like to make a suggestion. 
It seems to me that it would be well to delay discussion of these 
reports until they are printed and in the hands of each member. 

I think it would be well to take up these reports from time to 
time at our different meetings, rather than to take up the time 
now. After these reports are printed and in our hands, then we 
can discuss them with greater intelligence, and it seems to me 
with better results to ourselves. 

President — Gentlemen, I wish to say that I have called on the 
Committee on Library, and I am disappointed that they have no 
report. 

President — This is the proper place for the Knapsack, and I 
call on Col. Kinne, its manager, to unload. 

Calls for the Knapsack were answered by the manager with a 
suggestion to postpone until next day. 

Mr. Brornwell— Mr. President, I think the proceedings had 
better go right along without discussion. I speak for myself 
alone, for Mr. Dornin and I will be absent from to-morrow's 
meeting on another Sacramento pilgrimage, but we are anxious 
to hear it all. 

Col. Kinne — Mr. President, we want to talk about matters 
that come up in these reports, and discuss them, and make sug- 
gestions in regard to forms, &c, but as manager of the Knap- 
sack, I am ready to say what I have got to say at any time. 



26 



CALIFORNIA KNAPSACK. 
Vol. 1. No. 2. 

C. Mason Kinne, Manager. 

Fire Underwriters' Association of the Pacific, 
Editorial Rooms " California Knapsack," 422 California Street, 

San Francisco, Feb. 1, 1881. 

Mr. : 

Dear Sir — Again the Editor of the "Knapsack " has to call upon its patrons 
for copy. The manuscript that you have, no doubt, prepared long ago for 
this demand is expected to be sent to our Editorial Rooms on or before the 
12th instant. 

The success attending our first issue should prompt you to give us a sample 
of your brightest thoughts, tersely expressed, embracing such matters as 
properly pertain to the very "broad gauge "of an insurance man. 
It is hoped and expected that your missives will " fall in promptly." 

Very respectfully, 

C. Mason Kinne, Editor. 



Editorial Rooms" California Knapsack," 

San Francisco, Feb. 15, 1881. 

In entering upon this, the second volume of our valuable and valued jour- 
nal, we have to congratulate ourselves upon the nattering reception accorded 
us last year, and to not only congratulate but thank our members who have 
so kindly answered the demand for "copy." 

As this periodical is intended as a repository for the collection of material 
and remarks on interesting subjects not properly belonging to any commit- 
tee, it was deserving of success, and this issue as well as the last proves that 
some such omnium gatherum w T as a requisite, and furnishes a vehicle for much 
that is rich and racy, valuable and entertaining. 

From the many contributions to our columns, the manager selects those he 
proposes to present to you, with the statement that the others are fully as 
deserving of a place; but life is short and time is precious, and we have no 
desire to weary you beyond endurance. 



BLACKSMITHING IN INSURANCE. 

A case came under the observation of a special some time ago, while in the 
general office of a company doing business in California, w T hich tends to show 
the importance of full particulars in making diagrams of risks. 

It seems the local agent of a small country town some years ago sent up 
an application, stating that as he did not clearly know the rate on the risk, he 
wished the company to affix the proper rate and send policy. This was done, 
and policy renewed year after year until the year 1880 rolled around, when 



27 

the agent paid a visit to San Francisco, and while there called at the office of 
the company and represented that Jones' risk was very hard to retain, as the 
rate was so high. The application was looked up and showed two buildings 
situate within ten feet of each other— one marked " Jones' dwelling," and the 
other " Black Smith." In making the rate, the general agent had taken as 
a basis D class blacksmith shop, 3.25; exposure, dwelling, .50; stove-pipe and 
cloth lining, 1.25 — making tariff rate 5 per cent. 

The local wanted to know if the rate could not be made less, and explained 
that the building marked "blacksmith" was no blacksmith shop, but was a 
dwelling occupied by a colored man named Smith, whom he had designated 
"Black Smith " on the diagram. 'Tis needless to say the rate was reduced, 
all parties were satisfied, and the risk retained on the books of the com- 
pany. S. 

RAILROADING IN THE FAR NORTH. 

In the month of September, some six years ago, the writer stood upon a 
rude wharf at the old fur- trading town on the Upper Columbia, called Wallu- 
la. Across an expanse of sand some thirty buildings, comprising this once 
prosperous town, were to be seen, perhaps a round dozen of which were occu- 
pied, while the rest were more or less dilapidated and nearly covered up by 
the drifting sand, which in some instances reached to the second story or 
roof. 

The immediate object of the scrutiny was to determine which of the inhab- 
ited buildings laid claim to being the haven for travelers. The afternoon 
was, moreover, cold and gloomy enough to cause the few arrivals by fhe river 
steamer to seek shelter without delay. The only available place betrayed no 
sign, but one of the very few residents disclosed its whereabouts, and it 
proved to be a combination of general merchandise store, hotel and apothe- 
cary's shop — as a matter of course presided over by an American. Careful 
inquiry failed to afford any information as to whether the train would leave 
for Walla Walla that day or the next. The landlord said no "time table" 
had been prepared, and frankly admitted that the president of the road and 
himself were not on good terms, and carefully neglected to tell any one just 
when a train would start. The captain of the steamer was equally unable to 
give the information, and finally supper was announced, causing a temporary 
suspension of the questioning. Later on, we gathered around the "inevita- 
ble" stove and listened with great interest to the many stories about the 
railroad, furnished by a person who had arrived on the train from Walla 
Walla the day before — time, seven hours; distance, thirty miles. Until a. 
short time before, he said, the rails in use were made of wood, but iron had 
been procured and laid; that the rolling stock was of a very poor character, 
and, impeded by sand drifting across the track, the result was that the trip 
ordinarily consumed more time than would suffice to walk the whole dis- 
tance. To them were added a story of a dog belonging to the president, 
which, until an accident had occurred by which its life was lost, used to trot 
along with the engine and drive cattle off the track. 

An early rise was the order for the succeeding day, because it was said 



28 

that the train might come in and return to Walla Walla at any hour, but it 
proved to be 11 o'clock before a very diminutive locomotive was espied back- 
ing down two small cars toward the wharf. Next two men came out of a sa- 
loon near by with common water pails in each hand and went to the river 
and began bringing water to the engine. This was poured into the boiler 
through a hole on top fitted with a lid to screw down. The smile with which 
Ihe three or four new-comers greeted this operation was only equaled by the 
non-concern of the old citizens, in whose eyes the proceeding was altogether 
usual and in order. 

In a short time the conductor announced that the train was ready to start; 
so, taking our seats, it moved away. The features of the trip consisted of 
three or four stops at stations, including the taking of more water at least 
twice, and the frequent halting of the train until the train hands should shovel 
sand from the track. We finally arrived at Walla Walla in four and a half 
hours, and believed the assurances that the trip had been a quick one for that 
road. The object of the journey having been attained, arrangements were 
made to return by " fast freight" to Wallula early upon the following daj\ 
Before leaving, however, the president inquired- for and having found that a 
San Francisco insurance man was in town, he applied at once for insurance 
on freight carried by his road and which might possibly be destroyed or dam- 
aged by fire from the engines, which, although they had no spark catchers, 
he said, were perfectly sale, owning up, however, to several fires. Promising 
a speedy reply from Portland, the return was commenced. The conductor 
kindly consented to throw a bench across the floor of an ordinary close freight 
car partly filled with freight, leaving the side-doors open. This proved to be 
quite desirable, and enabled one to look (until tired) at the waste of sand, 
relieved here and there by scanty vegetation and fences. 

After some time had passed, I became conscious of the presence of an unu- 
sual degree of heat, and, casually looking around, was much surprised to see 
the end of the car on fire and the freight in a fine blaze. How to attract 
attention was a question, and to add to the dangers of the situation, the train 
was on a down grade, and for once it was going altogether too fast to admit of 
a jump. Anxiously looking from the side in hopes that the engineer's atten- 
tion could be gained, a water station appeared in the distance, and the sur- 
mise was rightly made that the train would come to a stop and the writer be 
released. The stop was made and the fire immediately attacked with water 
from the tank. After this the train went on and finally reached Wallula late 
in the afternoon with at least one thankful passenger. 

It is hardly necessary to add that the president was never troubled with a 
reply to his insurance proposition. X-Ell. 



A "WATER CLAUSE" NEEDED. 

Editor " Knapsack" — Dear Sir: The following letter was received by the 
Secretary of one of our mining companies, and is interesting as showing the 
broad ground that some writers take of the hazards covered under a fire pol- 
icy. We can no longer rest in fancied security from loss by floods, but must 



29 . 

at once establish a rate for this risk and insert a " water clause " in our poli- 
cies. The orthography of the letter also indicates that the "spelling reform M 
has taken possession of the claimant: 

11 , Secretary: 



"Dear Sir — We are still on top, though the storm for the past new days 
has been most sevear. My house was flooded on night of 30th, and carpiets 
well nigh ruined, otherwise suffered no loss. Suppose we are entitled to dam- 
iges from insurance companies. Are we not? I may be able to use carpiets 
again. Shall have them washed tomorrough and see what can be done with 
them. Those bought in my time cost $121.77. Then thare is another that 
used to be on sitting room of which I have no bill. Some bedding and 
blankets were soiled, but not enough to take into account. 

' ' Truly yours, * ' . ' ' 



The following clipping may have been read by many of you, but is good 
enough, as an evidence of the average insurers idea, to read to you now: 

INSURANCE AGAINST NEIGHBORS. 

Human nature is the same the world over, as the following incident will 
help to show. A local insurance agent called on two of his customers, whose 
premises adjoin, for a renewal of their policies. The first one is a grocer. 
The agent said to him: 

•'I suppose, Mr. , that you will renew your policy, which expires next 

week? I have called to see about it." 

"Well, I suppose I'll have to," said the grocer. "As far as I am con- 
cerned, there is no need whatever that I should insure. I am here all day to 
look alter things, and there ain't a bit of danger of fire from my place. But 
there is no telling what that fellow next door may do, and as long as he is 
there I've got to keep insured." 

The agent called on the customer next door, who is a baker. He could not 
help reasoning that if the danger in that establishment was so great there was 
a possibility of having the amount of his policy doubled, at least. 

He told the baker why he called, and hinted that there might be a proba- 
bility of a desire to increase the policy. 

"No," said the baker, scratching his head, thoughtfully, "I don't believe 
I'll add any to it. I wouldn't insure at all if I wasn't where I am. You 
see I'm up all night baking, and can watch things, so there's no danger here, 
but there's no telling what that chap next door will be up to. If it wasn't for 
him I wouldn't insure a cent; but as it is, I've got to do it." — Ins. World. 



The following is from the same pen that gave us the excellent article on 
11 Shadows " last year: 



30 

SUNSHINE IN THE BUSINESS. 

How blessings brighten as they take their flight, how the scenes and inci- 
dents of ten years ago stand out a pleasing contrast to the toilsome present. 
I remember a special trip from Oregon to California in that happy past. 
Roseburg was the starting point. Roseburg! dreaming in the lap of a luxu- 
rious valley surrounded by brave hills. 

At the time of which I write, it was Bohemia; to know one of the boys 
was to be welcomed on every hand. There was Van and Asher and Mac, the 
Colonel, the Senator and the Judge. The freedom of the city was extended 
and accepted with more of hospitality and less of ceremony than in — London, 
for example. 

The Senator was sole agent there and monopolized everything from dwell- 
ing to brewery. The stage for Beading left in the morning, but there was a 
night before that morning, all owing to a song, a simple camp meeting song. 
No sooner did its notes strike the Colonel's ear than he was aroused. As a 
circus band rouses the neglected charge, so roused it him, this song, that 
Colonel, from away down South in the land of cotton came a host of memo- 
ries, bright days of his boyhood, long forgotten in the race for wealth. Tears 
swelled to his eyes, while his smooth shaved lip quivered the pleasure he felt. 

We went from one friend to another gathering a chorus in our wake; the 
Colonel led the choir, and we sang this song until circumstances made it 
advisable to pull off the Colonel's boots and put him to bed. We left town at 
6 in the morning. To be hurried from bed at candle-light, to scour the town 
for a mislaid overcoat with a lantern; to bolt a useless meal is neither im- 
pressive or inspiring, but a dozen outstretched hands, a dozen voices saying 
good bye, friendly packages that open with a pop and shut with a gurgle, 
these are the charms of Roseburg. Where else in the world do people get 
out of bed on a cold day in the dark to say good bye? The stage agent, 
known familiarly as "Van" most of the time, is now loading the coach, 
solemn and unapproachable as a chief engineer at a fire, trunks go on the 
hind boot, mail sacks and treasure box in front, small traps under the seats, 
over them the passengers. 

I have the seat of honor, beside the driver, the man at the right of the off 
wheeler buckles in the trace, the man at the head of the leader springs aside, 
crack goes the whip, six horses plunge madly forward, the brake scrapes a 
moment, and we are off. In the coach is a man who telegraphed from 
Portland for an inside back seat; he wears a silk hat; he confided to " Van " a 
desire to quicken the usual schedule time by a day or two, he told the driver 
at the first watering place of a bet to beat the time of a friend gone down by 
steamer. Do I need to tell a special agent that :i back seat is the worst in the 
coach? That a silk hat in traveling is an impossibility? No more than I 
need add that this man was a salesman from the East. He became a nui- 
sance, he and his hat, and his friend, and his business. At the first piece of 
" corduroy" we came to, the driver gave us a hint to hold on and then let out 
his team. Such a shaking up I never experienced, we held on and howled, 
above the din I could hear the voice of the salesman first loud then fainter, 
when w T e stopped which was at a station, he crawled out; his back was bent, 



3L 

the crown of that hat had disappeared, the rim was around his neck, he had 
not held on, he was a wreck. In reply to threats and imprecations the driver 
said: "So! that's all the thanks I get for trying to help a man. You want 
to get to 'Frisco, don't you? want to beat your friend? Well, I drove fast on 
purpose to help you out, and now you growl, want to be an angel, don't 
you?" The salesman laid over, and his friend reached San Francisco seven 
days ahead. 

After stopping at Jacksonville over one trip I was uneasy about my seat on 
the incoming coach. " Jerry," the driver, was a character in his way, besides 
being a perfect encyclopedia of slang phrases. In due time she hove in sight 
with Jerry at the lines, and alongside him a moon faced traveler with helmet 
hat and spread umbrella. There was a quick and expressive interchange of 
glances between Jerry and me, though not a word was spoken. " Go up to 
the barn," he said later, "and get on the box seat when the hostler brings 
her down." I sat there unconcerned while Jerry had a pow-wow with the 
others; there seemed to be considerable excitement, with violent gesticulation, 
and Jerry rattled a long iron chain which he held in his hand; he got them 
all inside at last, and after riding a few minutes in silence, he said: "So 
you're a mauiac, are yer — a ravin maniac, escaped from your keeper, did 
yer? Don't you try no crazy tricks on me, sabe? Cos I'll just chain yer 
down to the boot, I will, that's about what I'll do. Oh you're a nice lunatic, 
you are, with a bad eye, chawed up six men already, you have. Why don't 
yer give us a Stockton yell? Let out a Napa file-scraper, will yer?" 

And he chuckled and ogled me, and turned red in the face, and rolled him- 
self about, until I expected to see him go over the dash-board head first. 

" What in the world are you driving at?" I asked. 

"Oh, he never tumbles!" said Jerry. "He don't drop— can't see it yet, 
eh? Never traveled much, did yer 1 Ain't no insurance drummer, be yer? 
only a minister, perhaps — a Sunday-school teacher, likely. Ain't up to the 
ways of a wicked world. He's a little lammie — has to have his eyelids tucked 
back to see anything, he has. Oh, oh, oh!" 

"Jerry," said I, "if you don't stop this infernal nonsense, you won't get 
a cigar the whole drive." 

" Mean to say you didn't hear the racket I gave 'em?" he said, in an altered 
tone. "Why, Lord love you, thought you took it in as it went along. I told 
'em you was escaped from an asylum — mad as a March hare; I wouldn't trust 
yer inside for fear yer might tear 'em all to pieces. Got it now? See it? 
Good, ain't it? Now give us a yell — a regular blood-curdler. That's right — 
keep it up— send it into 'em! Oh, oh, oh!" 

All day, at change stations and watering-places, those deluded insiders con- 
sulted with Jerry in whispers about my case. Jerry was fertile in resources — 
too fertile, for he mixed his stories up in such a fashion that it dawned on 
them at last, and we made peace at Cole's Station, where we took supper and 
parted with Jerry. 

The home drive was made with Charlie McConnell, whose skill at the lines 
is only equaled by his gallantry and elegant manners to lady passengers* 
One of the fair sex was beside him ; but his love for a good cigar overcame 



32 

other obstacles, and he made room for me also. After a while the lady ob- 
served a little white post by the roadside with a large figure two (2) painted 
on it. 

" What is the meaning of that?" she asked. 

Charlie shot a glance over to me, and solemnly replied: 

" Madam, that is a grave. Two people are buried there. On a dark night 
the stage upset. Two people — strangers — were killed. The driver escaped 
as by a miracle. We buried them there, and erected this simple shaft to 
mark the spot." 

"Dear, dear!" she said, "how sad!" 

After a while she said: 

" Why, there is another head-board with 5 on it." 

" Yes, madam — the result of another accident. Here- in this lonely spot 
lies all that is mortal of five persons — all strangers — who met their fate by 
being thrown over this cliff on a winter day. The driver escaped as by a 
miracle. We read the funeral service over them and buried them together, 
erecting this simple shaft to mark the spot." 

"This is too horrible! Do accidents often happen?" she asked. 

11 They do — they do, alas, too frequently," said Charlie. 

Some hours later our .ady passenger gave a scream, and started from her 
seat. 

" Mr. Driver," she said, "There is a grave-post with 13 painted on it!" 

Charlie's tone of solemnity was sublime. "My dear madam, I am so 
sorry. That was indeed a frightful affair. Coach and horses, passengers 
and driver, went down this precipice with one grand crash. I was spared as 
by a miracle — caught on the projecting limb of a tree. Hours after, when I 
reached the wreck, all were dead but one, and I finished him off with a king- 
bolt. It was hard to do, but these survivors always sue the Company for 
damages, and I am simply working for my employer's interest. Madam, we 
read the funeral service over them, and buried them together, erecting this 
simple shaft to mark the spot." 

"Driver," she said, "I do not wish to discredit any statement you may 
make, or to appear to doubt your word, but I must say, this otherwise ago- 
nizing narrative seems to me like a fairy story." 

" Madam," said Charlie, "you have guessed it. I really must apologize 
for the king-bolt; otherwise I think it is a shame to spoil a good story." 

And so this jolly ride had an end, like all else in life; the stage-load became 
diluted in the larger accommodation train, and we drifted into the big stream 
of humanity rushing to " the Bay." G-. 



WHEEE WAS THE DEACON? 

It was at Sacramento, last year, during the "session," time midnight, 
when two of the beys parted thus: Said one: " Good-night, old man— I leave 
you here. Have to sit up with a sick friend. By the way, do me the favor, 
as you pass my room on your way to bed, to step in and disarrange it; turn 



33 

down the clothes and rumple the pillows. My door is never locked, and 
when the others look in at breakfast time they will see that I am off. Un- 
derstand?" 

"All right," said No. 2. 

They met at noon. In reply to vigorous upbraiding, No. 2 said: "I did 
disarrange your room, put water in the basin, rumpled the towels, tore the 
bed to pieces — why, room 17 looked as if there had been a fight!" 

" Seventeen? Good gracious, that's wrong! That's the Beacon's room!" 

" The dickens it is! Then, where was the deacon?" 



HAVERSACK PHILOSOPHY— CRUSTY HARD-TACK. 

Mr. Editor: Nutritive and brilliant extravaganza in your spicy department 
is always enjoyable and appreciated, and this fact warrants the relegation of 
these meaqre and crusty rations to the knapsack's accompaniment — as antici- 
pated by the title of our contribution. It need not be inferred that we are 
starting out on any well-defined long march, and that our haversack is replete 
with dry " crumbs of comfort " — on tbe contrary, ours is a foraging expedi- 
tion! We may camp in dangerous fields, and tramp on the coins of friend 
and foe alike in these chosen philosophical meanderings — brief, because 
obliged to be, but nevertheless realizing that the practical teachings of the 
association admit the broadest toleration of individual opinions, and steadily 
ameliorates all prejudices incident to the denominational or varied interests of 
fire underwriting. " A little healthful, plain talk, therefore, in an association 
where there is no distinctive line drawn as separating local, Eastern or for- 
eign, Board or non-Board, expeiienced or inexperienced, may tend to 
strengthen and sustain a common brotherhood of underwriters in their efforts 
to elevate our business, not only by discussing fresh topics, but by putting 
older ideas in fresh and practicable shape. Therefore, 

1st. It is most obvious that members, one and all, should take a deeper 
interest in and participate in all regular meetings; instead of shirking, take 
rank among the workers; produce something, and not, like a sponge, absorb 
all that comes along, waiting to be squeezed into reciprocity. 

2d. Life is too short for men in this great business of ours to attempt the 
remodeling of characters we find in it. Active-minded idlers are even worse, 
and certainly more dangerous, than the throng of microscopic busy-bodit 8 
who magnify trifles, but are incompetent to grasp greater ones. All these 
characters add a zest, and amount to a necessity, towards perfecting our un- 
derwriting drama; otherwise it would drift into a monotonous and enervating 
comedy — a kind of goody-goody humdrum, without progress or enterprise. 

3d. We may sermonize, declaim, exhort, harangue, and lecture, but the 
members of the Pacific Association must give results — the motive pcioer — if 
the fraternity is to feel the benefits of such Association; quarterly outbursts 
of courtesy and annual assentation to creed-bound practices amount to 
naught unless carried into everyday life and honorably adhered to, because 
appropriate, becoming and comfortable. 

3 



34 

4th. It is a lamentable fact that adjusters on the Pacific Coast are becom- 
ing gradually extinct, and their places supplied by a class at present without 
epithetic distinction, unless we introduce them here as " Settlers. ,: The 
over-anxiety of the companies themselves to pay losses, and the thin-skinned 
make-up of executives, are the responsible causes for the extinction of the 
former and the epidemic of the latter. 

5th. Legislative prodding creates too much noise, fuss and cackling among 
underwriters. If this exhibition and characteristic virtue of insurance men 
could be spread out, and some attention given by them to politics from the 
primaries to election day, their power and influence could be so deployed 
as to economize all these periodical anxieties and wastes of time, chin-music 
and bullion. 

Lastly, fully equaling a military campaign in discomforts, inconveniences 
and hardships, is the continuous life of the faithful, plodding Special Agent 
and Adjuster, and with just about the same consequences; if successful, the 
generals in command secure the credit; if defeated and routed, we must then 
be prepared to selfishly shoulder the blame without any division whatever. 
There are several sides to this picture at variance with the above, as every 
Special present verily believes. 

We have now finished our tramp. If results shall be fruitful of the good 
intended, then our reward is ample and sufficient. In the meantime permit 
us to subscribe ourselves merely a Malicious Skiemishee. 



CONSOLATION. 

'Twill be a great comfort to many to know, 

Insurance adjusters to heaven must go; 

For if a just man is bound to get there, 

Most surely adjuster no worse will fare. 

Besides, I am lold, it chanced one day, 

An insurance adjuster to hades did stray, 

(The chances are, 'twas the fervent prayer 

Of a policy-holder sent him there), 

And at once aroused the devil's ire 

By investigating the cause of the fire. 

He annoyed hiui so, old Satan swore 

Insurance adjusters should come there no more. D. M. B. 



A LITTLE TALK TO SPECIAL AGENTS. 

When one attempts to talk on a subject of common interest touching our 
business, there are so many heads of subjects springing up that bewilderment 
follows. There is so much to say, so much that ought to be said in clear, 
ringing tones, which would find their way to each one, and wake htm up. 
It is common for our members to tell the wrongs we know of and do not 
mend — it is so common that if il were not told we would wonder. Yet here 
we meet each year, and, having read the lesson, go our way, quickened, but 



35 

unheeding. Why is this ? Do we not take pride in the fact that our business 
draws its rank and file from the best stock in the land. Is not Society, Art, 
Literature, strengthened by the workers in our profession? Let me confine 
myself to one suggestion: The simple fact is here — there is no good faith 
among us. East, West, North and South, the same charge is made — no good 
faith. 

I fear me it is true. It springs from cowardice, nothing less— moral coward- 
ice. The will power which carries us through danger and trial in all else 
falters and is weak in this. My friends, let us mend it; let us talk less and 
do more; let us make a start — let the year 1881 mark this step, viz: Having 
each in his own mind fixed the way to bring good faith into the business, fol- 
low it, stick to it. 

You are the managers of the future — before long, you will guide and teach 
others. Teach correct practice; observe it that you may teach. Whatever 
the condition of things, keep faith. Do not agree to a compact until you are 
ready; if you promise, keep it; when you are ready to break the compact, 
let it be known; release yourself openly. 

Let us think less of our neighbors' business. Each one of us is a neigh- 
bor — each one can take heed for himself. In all the town, is there another 
business worked by men— gentlemen — where a mere rumor of bad faith does 
such harm? 

7s it because of the willing ear ? Already this Association has done much — 
so much that the special agent is on terms of cordial friendship with his 
brother special; so much that strife, and sarcasm, and ill feeling has melted 
away, and a spirit of unity is found in its place. What is possible in the 
adjustment of losses is possible in the field and in the office. Let the past 
go; work faithfully for the present, the future will be here soon enough — too 
soon for all. 



Editor "Knapsack" — Dear Sir: Your valued reminder of the 1st inst. is just 
received, and I am sorry found me not like the wise virgins — for no manu- 
script was ready or even thought of, and only to give you "copy " do I pre- 
sume to take your valuable time. As you want "broad gauge," I give it to 
you, entitled 

"THE BASE LINE." 

Some years ago an adjuster for one of our Eastern companies was sent to 
Humboldt County to settle a loss on a livery stable building, owned by the 

well-known stage man, Tom S . The claimant and adjuster arriving at the 

scene of the conflagration too late in the evening to do anything, it was agreed 
to meet at 7 o'clock the following morning for work. Promptly at seven, 
both parties were on the ground, the measure of the building was "taped 
oflf," sizes of sills, posts, plates, joist, rafters and other necessary memoranda 
made, whereupon the claimant was asked if he knew of a reliable builder in 
town who was well up in estimating on buildings and contracting for work of 
that kind. He said that there was a first-class man who thoroughly under- 
stood the case, and he soon had him at the place. On propounding the ques- 



36 

tion, the adjuster was convinced by the emphatic and confident answer of the 
builder that he was the man looked for, and opportunity only was lacking to 
launch upon the world the result of a well-stored mind. The ground plan 
was again taped, the sizes of timbers and general construction of the stable 
gone over, and then the builder was ready to go to his office and "figger. " 
When asked how soon he would return with his estimate, he said in a couple 
of hours. It being then nearly 8 o'clock, and as he wanted to do his work 
undisturbed, it gave the adjuster plenty of time to fill out his proofs (except 
the amounts) and also to look around town. Having rained for a number of 
days previous, the country was not in a favorable condition for extensive 
pedestrian exercise, so ample opportunity was afforded to watch the clock. 
Ten o'clock soon came, but no builder; then eleven and twelve. Dinner here 
came to the rescue and was quickly disposed of, and then the wonder was, 
why does that man delay so much? One o'clock, two, and at three o'clock, 
with patience well nigh exhausted, the adjuster proceeded to the office to inter- 
view the builder. On arriving in front of a small one-story frame dwelling, 
situate a little back from the road, the builder was seen in his shirt-sleeves 
standing with a table before him. Shortly he began walking back and forth, 
then he would stop and look at something on the table, taking a pencil which 
he had in his mouth and]point at the something on the table; then he would 
resume his walk, only to stop apain and look at the table. How long this 
had been kept up, is hard to say, but it is fair to presume for nearly all day. 
Finally the adjuster opened the gate and walked up to the house, knocked 
and was invited to enter. On going into the room his curiosity was excited to 
see what was on the table which had interested the occupant so greatly. 
Imagine the surprise when it only turned out to be a large piece of brown 
paper spread over the table, a steel square and a straight line drawn on the 
paper. Desirous of knowing how the builder was progressing, the adjuster 
asked him how he was getting along, and was rewarded with the encouraging 
reply, " Splendidly; I've got the base line drawn;" at the same time pointing 
to the straight line on the paper in a sort of triumphant way. 

Mr. Editor, I will assure you it was extremely difficult to refrain from 
smiling audibly. Not wishing, however, to wound the feelings of the party, 
the adjuster proceeded to give the builder the benefit of his figures, and in an 
hour the estimate was made and written out by the adjuster. When asked 
for his bill, the builder and contractor said it was $10. To this a demurrer was 
made, the adjuster wanting to know what his regular charge was for a day's 
work, was informed that it was $3 50, but he thought his superior knowledge 
as a builder should entitle him to the full amount. He reluctantly took $5, 
and no doubt often wishes for opportunities to earn a V so easily. 

Yours, etc , S. 



37 

COMMISSIONS. 

[Written for the " Knapsack.' 

The morning mists were fading fast, 
As through a mountain -village passed 
A traveling agent, early bird, 
Who uttered low the magic word 

" Commissions." 

His form was bent, his haggard face 
Showed traces of an ancient race, 
While ever, as he strode along, 
He muttered in a well-known tongue, 
11 Commissions." 

Touch not that mill, the " local " said, 
The •« lead " is " petered out " and " dead " ; 
The moral risk is something "snide"; 
But still that anxious voice replied, 

" Commissions." 

Oh, stay ! the Piute maiden said, 
And rest awhile your weary head ; 
A wink lurked in his dexter eye, 
But still he whispered with a sigh, 

" Commissions.' 

At midnight hour as homeward sped 
Two jolly miners to their bed, 
Bright flames leaped forth with lurid glare, 
Reflecting through the murky air, 

" Commissions." 

Morn on the ashes warm and gray. 
Disclosed the traveler miles away ; 
While from the " local" standing near, 
A voice came with a hearty cheer, 

■■ Commissions !" Buzite. 

And now, comrades, having opened the Knapsack for your inspection, and 
showed you the good things in the Haversack, we will husband what further 
ammunition we have, and take a pull together at the old canteen when we 
meet around the festive board to-morrow evening, where neither rebates nor 
"commissions" will trouble us; and, trusting the " consolation " we'll draw 
from the occasion will long be remembered, I beg to roll my blankets, buckle 
my knapsack, and " close up " generally. C. Mason Kinne, Editor. 

Several of the members expressed themselves as very much 
entertained over the repleteness of the spicy Knapsack, but Col. 
Kinne declined any popular vote of thanks for his collection. 

The Chair next invited Mr. E. W. Carpenter to address the 
Association, who being called upon, spoke as follows: 



38 
CAKPENTER'S ADDRESS. 

Mr. President and Gentlemen: 

When I was asked by the President of this Association to prepare some- 
thing for its annual meeting, and when I saw the array of talent already mar- 
shalled in the ranks of the regular Committees, whose reports have already 
broken upon your ears, I was at a loss to account for the suggestion. It finally 
occurred to me, however, that the most dull and dreary background might set 
off to advantage the brilliant productions of more skillful artists, and viewing 
the matter in this light, I have attempted to say something about 

THE APPOINTMENT OF AGENTS. 

There are on this Coast not less than four thousand fire agency commissions, 
issued by forty-one companies or general agencies, and held by not less than 
fifteen hundred different individuals. These are the men that bound their 
principals last year for $298,154,601, and collected, and (it is to be hoped) 
remitted the $4,655,173 premium thereon. Manifestly, then, the establish- 
ment of agencies for the handling of such a sum is quite as important a nat- 
ter as the adjustment of losses which involve only one-third that amount. 
Yet it is a well known fact that there is not, usually, as much care bestowed 
upon the former as on the latter. While, in many instances, losses might be 
escaped, serious complications avoided or settlements facilitated, by the be- 
stowment of the agency upon a good man, at the outset, it is too often the 
case that the appointment is made in haste, to be supplemented by the usual 
repentance at leisure. 

Well, how should agents be appointed? No definite rules can be given, 
but it may be instructive to refresh your memories on a few points already 
well known to you. The writer probably shares the fallacy of all his brethren 
in supposing^ himself to be about as good a judge of human character as any- 
one on the Coast. And this is the first error to be guarded against. Do not 
be over confident of your ability in this respect. Do not form your opinion 
of a man's availability on the instant, before you have ever seen him perhaps, 
fiom his name, his connections, his handwriting, his nicely turned sentences 
or his promises. 

The practices of agency appointment are various, from the general agent 
who consults the commercial reports, and makes his appointment by mail at 
the expense of a three cent stamp, or the special who makes his diagram of 
the town from the rear platform of the lightning express, and throws his card 
to the man who is watching the train on the assumption that he has plenty 
of time for the business; to the painstaking special who spends from a day to 
a week in each town, paces off all his distances, counts the stove pipes, com- 
putes the area of cloth lining, direction of wind and movement of business, 
gets acquainted with everyone, selects his man, treats his family to a buggy 
ride and leisurely moves ten miles further on. 

But while we may criticize each of these methods we shall find that, after 
all, it is easier to say what not to do, than what to do. 



39 

I do not know what the experience of others has been, but in my own case 
the results have been such that I would say, first and foremost, do not be 
captivated by a smart man. From the earliest days an alliance with the party 
who would take you up into a high mountain, and promise you a conquest of 
all the kingdoms of the earth if you would entrust yourself in his hands, has 
not been satisfactory. Your " smart Alec " may "know it all." If he does 
he will "wag" the company and become unendurable as an agent, and if 
he does not, his agency exhibit will represent a panorama of blunders, not 
without its red fire effects, concluding with a dissolving view of unfulfilled 
promises and general disappointment, and a possible embezzlement of the 
cash box. The smart man won't wear. He will buck in the traces and sug- 
gest that if you cannot trust to his judgment you had better get someone else. 
Or he will find his field too limited and desire to be transplanted to some 
other which has been cultivated up perhaps to the income-producing standard 
of $3,000 per year, or he will intimate that his abilities can only find scope 
as consulting assistant or ornamental underwriter in the head office. He will 
write you long letters on unimportant matters, apparently for no other pur- 
pose than to show that he can do it, and to overawe you with the magnifi- 
cence of his rhetoric. In case- of loss, he will so completely commit the com- 
pany before the adjuster arrives on the ground, or else, if by any perverse 
accident he should have taken sides with his principal, will have awakened 
such a hostile feeling on the part of the assured, that the adjuster might as 
well try to dam the Sacramento flood with a " gaul darn," as to satisfactorily 
resist the avalanche of difficulties he finds sweeping down upon him. In a 
large number of instances, also, the smart man is smart enough to use the 
company's money and keep out of tbe penitentiary at the same time. 

Avoid, also, the man that is almost too good, that feels it to be something 
of an humiliation to " solicit," too much of a " begging business, you know." 
His connections may be influential, his family tree just blossoming with 
choice risks, not a cloth lining, stove-pipe or frame range to mar the vision 
of splendid business, but if his blood is too blue, his first condescension — 
the acceptance of your commission — will be his last, and the postage stamps 
that you will waste on attempted cultivation might better be donated to the 
ubiquitous lady that is collecting a million for coin and glory. 

A man that owes everybody, however strongly he may be recommended by 
the storekeepers, is not the best appointee. He is too apt not to know what 
premiums have and what have not been paid, to trade policies for provisions, 
insurance for intoxication, or his company's contracts for Cohen's calicoes, 
perfectly content to let matters run in this way, without a settlement in any 
quarter, so long as the merchants or the home office will stand it. It is such 
agents that are swelling up the item "premiums in course of collection" on 
the books of the companies, and that are rendering the future fire hazard of 
the cashier extremely "special," by filling his heart and mouth with sinful 
explosives whenever the delinquent ledger accounts loom up. 

The man with plenty of time is not always to be depended on; his ability 
may be in inverse ratio to his leisure. There are peculiar circumstances 
which would cause an exception to the proposition; but as a rule, the pos- 
session of many idle hours because a person's services are not in demand by 



40 

others, or because he cau work up no business for himself, does not constitute 
the best recommendation. As is well known, the too frequent appointment 
of such " no account " men has already thrown discredit on the profession. 

It may be suggested that if we go on at this rate, no agent will be appointed 
at all. Well, it must be admitted that there are some towns in which, may be 
found persons competent for judges and governors, fit to prescribe for life 
present and life to come, but where no available material from which to con- 
struct an insurance agent is to be had. In such rare instances, I would send 
a " sour grape " report to the company and keep out. Where business can- 
not be done satisfactorily it had better not be done at all. 

But in most cases a good man can be had. Who shall he be? My prefer- 
ence would be, above all others, for the modest man. This may seem like a 
heterodox assertion when, according to the generally accepted creed of the 
profession and the concurring belief of the profane " cheek and brass" are 
such essential prerequisites to the prosecution of the business. So the state- 
ment may be qualified by saying that when a modest man is spoken of, I 
mean one who is not self-conceited and not over-confident as to his own 
ability, and do not refer to the bashful young man who would slink away at 
the first rebuff, and who would name his rate with that apologetic sort of air 
which seems to say, " I know I am trying to rob you, but will make it stick 
if I can." The modest man who does not expect to conquer the world with 
a rocket or capture his community by a display of fire-works, but who relies 
upon regular siege operations, and the picking off of his men as he can get 
sight of them; the man who is content to wait, but keeps at work all the time 
he is waiting — this is the agent that we are looking for. He must be system- 
atic; keep an index of those to whom he has spoken on the subject of insur- 
ance, with. the dates when he thinks it will be safe for him to "call again;" 
must know the value of a dollar, and not expect to get it without working 
just as hard for it as if he were cultivating an agricultural instead of an insur- 
ance field. 

He need not, necessarily, be an old resident of the place, or have a very 
general acquaintance in it. I have in mind a town where our commission 
was in the hands of one of the fathers of the burg, but where our only busi- 
ness for years was in the blotting pad and coin-wrapper line. We did not get 
even our own agent's risk, and the necessity for a change was apparent. A 
popular man who knew every one was recommended, but I perversely ap- 
pointed a quiet-spoken, unassuming gentleman, who had been in the State 
only about a month, and who was prepared to add to his income in any legit- 
imate manner. He requested the loan of my rate-book, so that he could read 
it by himself, and that I would come around in the evening and explain it to 
him, and he must have a policy blank that he might examine the microscopic 
matter and have it made clear to him, and he insisted on knowing how to 
make such a diagram as would enable the head office to determine whether 
vacant buildings or vacant lots surrounded a risk, and whether a brick church 
or frame saloon was under consideration. All these were good indications. 
He went to work. One of his first risks was that of our old agent, then he 
took in some more that our old agent had mortgages on, then he insured his 
boarding house keeper, then his own small stock, then the owner of the 



41 

building in which he had started his little store, then the next neighbor, and 
so on until his town arrived at the honor of a separate page in the locality 
register, and his agency ranked among the best and largest on our books. 
To-day this gentleman is not only one of the most successful agents on the 
coast, but he has, in five years, built up a mercantile business which places 
him in the lead of all competitors in a large interior town. This instance 
illustrates the fact that plodding perseverance is what is needed, and that too 
much weight is often given by specials and managers to considerations of 
influence, business relations and popularity, in making their appointments. 
Such a nan as the one to whom we have referred appreciates square treatment, 
and his loyalty cannot be shaken. His modest mind is not likely to think 
his services are so valuable that he can indulge in all sorts of irregularities 
and that yet you cannot afford to do withoat him. He is anxious at all times 
to receive instructions, and willing to follow them. Give us the modest, per- 
severing man every time. He is not only more satisfactory to the company, 
but he " takes " better with the public than the loud-mouthed, blatant incar- 
nation of self-conceit, who too often mistakes his own braying for the lion's 
roar. 

How shall the agent be appointed? Well, ia whatever manner, let it, if 
possible, come as a solicitation from the appointee rather than from the 
company. An agent who looks upon his commission as a favor bestowed 
may be relied upon for better services than one who has reason to believe that 
the obligation is on the other side. In most cases the exercise of a little tact 
will at least relieve the company of any suspicion of begging for a representa- 
tive, and thus at the outset place itself in the superior position. While the 
usual method of appointing agents by specials on the spot is without doubt the 
best, it often becomes desirable to make an appointment by correspondence, 
and in such cases the reports of the commercial agencies may be consulted 
with profit, or your nearest agent to the contemplated field will set you on 
the track of just the right man. Where it is a case of change of agency the 
former agent will, as has been shown by our experience, often select a better 
man than you could do, and better than he is himself. It is no reflection on 
the ability of the special agent that he should be able to do this. The old 
agent's experience in the business, limited though it may be, has not failed 
to give him a fair idea, not only of what is required in a general way, but 
what peculiar qualities are essential in his own little community, and having 
lived in the place for years he has the entire population to select from, while 
the special has only the few persons that he may meet during a half day's 
visit. And thus it happens that the second agent is frequently better than 
the first. The greatest care should be taken to place the agent in hearty ac- 
cord with the company at the outset, to feel that it is his company, that he is 
"a member of the family," and that the special making the appointment is, 
aside from all business relations, his personal friend. We do not believe that 
wine suppers or frequent surveys to determine whether a certain house for 
transient guests shall be treated as a boarding house or hotel ara essential in 
order to induce these friendly feelings. In fact, the San Francisco offices, 
as a rule, do not cultivate by irrigation, but a certain open-heartedness of 
manner, a frank, cheerful and even blunt style of speech, such as some that 



42 

I see around me possess, in an eminent degree, is what is principally required. 
In addition to the quality above referred to, many of the members of this asso- 
ciation possess other individual accomplishments, which give to each respect- 
ively his coigne of vantage. All of us non-musical members listen with envi- 
ous ears to the rollicking airs which bubble up spontaneously from the throat 
of our friend Grant, and make more friends for his companies than vcolumns 
of statistics laboriously erected. And the easy abandon, the ready command 
of language, the witty impersonations of Major Bromwell — why, the old Cali- 
fornia ought to figure these accomplishments among its most valued assets; 
while our friend Sexton's remarkable ability to let every man have his own 
way, without sacrificing the interests of his company, to state plain facts in 
a homely way, to hit the center every time he fires a shot, gives him a unique 
position of advantage among the fraternity. With some of us, and I trust I 
shall not be accused of intruding personal matters before the Association, our 
chief characteristics are modesty, a certain diffidence inherent in our natures, 
noi always receiving recognition but nevertheless a part of us, and which we 
trust may some day be appreciated as a curiosity, if not for its own sake. 
Please pardon this digression, which the salient special points of those about 
me tempt me to make still greater. 

The appointment of the agent should not be considered complete until he 
shall have received his instructions. While it may not always be practicable, 
in the case of a flag-station agency for instance, to delay long enough for a 
thorough posting on the spot, yet there is, beyond question, too much of an 
effort generally used to " make time," to get around, to send in reports of a 
large number of places visited and agents appointed and to trust to corres- 
pondence from the home office to send those instructions which could be so 
much better given in one-fourth the time by the special in person. In no 
better manner can the new agent be enlightened with reference to the astro- 
nomical and other mysteries of the rate book than by a practical exemplifi- 
cation of the rules as applied to risks actually existing in his own town. 
By visiting these risks in company with the special', he learns not only how 
to rate, but what the rates on these particular risks are, introduces the spe- 
cial to the owners thereof, is all the time forming a closer acquaintance with 
the special himself, and the latter has each risk fixed in his mind more defin- 
itely than would be possible by any other course. Posting the agent in this 
manner not only saves the home office correspondence, which I trust I may 
not be accused of being unduly anxious, from personal reasons, to do, but it 
secures to the company business that it would otherwise never obtain. Itiiot 
only cultivates an acquaintance between the property owner and the com- 
pany, but it gives the agent that confidence in his ability to do the business 
right, without which the most conscientious representative would often do no 
business at all. If the rate-book is simply left with him he will in many 
cases either not study it at all, or if he fails to fully comprehend it, will be- 
come disgusted or fall into the error that he is the only one that could not un- 
derstand it at a glance, and being ashamed to show what he supposes to be his 
exceptional stupidity, will not ask questions of the home office, but simply 
keep quiet. Probably there is not a special here present that cannot call to 
mind instances of dead agencies which they have visited with funereal intent 



43 

that have had the breath of life blown into them through the medium of an 
instructive mouth, and that have become the most active of their workers. 
A new agent will ask ten questions of a special on the spot, when, on ac- 
count of the trouble required, and the more formal character thereof, he 
would not ask one of the home office. 

The rate-book, while it may require more words for its explanation, does 
not by any means constitute the most important branch upon which instruc- 
tion is required. How to make a diagram, how to take an application, how to 
report and remit, the moral hazard, the difference between cost and value, 
the margin for safety to be left with the assured, and many other points which, 
like these, are so familiar to every underwriter that it would appear like 
supererogation to mention them, all should be explained to the novice. 

Even if our uninstructed agent attempts to do business he makes such a 
mess of it, in the first instance, compromising himself as to rate or in the ac- 
ceptance of a risk, promptly declined by the home office, that he concludes 
the sacrifice of his self-respect is not warranted by the few dollars he would 
receive as commission, and he consigns his supplies to the dustiest corner 
and highest shelf of his room, puts a premium chromo in his commission 
frame, receives his regular supply of blotting pads and inquiries as to why 
he don't "do something " with equal composure, and insures his own prop- 
erty with some agent that " knows all about it," and that will divide commis- 
sions with him in consideration of the fact that he is "in the business." 

And, in connection with this question of the instruction of agents, it may 
be pertinent to inquire whether agents are not often changed when they only 
need instructing — whether it would not be better to post the old agent than 
to exchange one uninstructed agent for another equally in the dark? 

I cannot close without an apology for having occupied so much time in 
telling you nothing new — nothing but what you were familiar with before. 
But while disavowing any such egotism as would be implied by assuming to 
instruct this Association, I hope I may have been able to direct its attention 
more earnestly to the importance of the subject which has been considered. 

Mr. Grant — Mr. President: There is a special committee that 
might report here — the Dinner Committee. They have reported 
by means of a circular to each one who has shown an inclination 
to meet to-morrow night at the annual dinner, our first event of 
that kind. In case any one, by mischance, should have been 
overlooked, I will say that this dinner takes place to-morrow 
evening at 7 o'clock, at the Maison Doree. 

Mr. Bromwell — Mr. President: I move that we now adjourn, 
and postpone the election of officers until to-morrow evening. 
The dinner has been gotten up under the supervision of the 
present presiding officer of this meeting, and he should, of 
course, preside to-morrow evening; we should now adjourn. 



44 

Secretary — Mr. President : I will state that there is an appli- 
cation here for admission of Mr. Kudolph Herrold to member- 
ship in this Association. He is connected with the Hamburg- 
Bremen office. 

The Secretary was ordered to cast the ballot, and Mr. Herrold 
was duly elected. 

Secretary — Mr. President and Gentlemen : I want to speak 
on the subject of the renewal of subscriptions of the Coast Review, 
Monitor, Law Journal and Insurance Times. There has been no 
order given to the Secretary for the renewal of subscriptions for 
the current year. 

Mr. Gunnison — Mr. President: I move that the Secretary be 
directed to subscribe for these periodicals just mentioned. 
Adopted. 

Mr. Clark — Mr. President: It has been announced from the 
chair that Mrs. Chalmers, the wife of one of our oldest mem- 
bers, has just died, and it would seem fitting that this Association 
should take some sympathetic notice of Mr. Chalmers' bereave- 
ment, and to that end I move that a committee of three be ap- 
pointed to draft resolutions suitable to the occasion, the commit- 
tee to be appointed by the Chair. 

Carried. 

The President then appointed as such committee Messrs. 
Clark, Kinne and Mel. 

Mr. Dornin then moved that the report of this committee be 
spread upon the minutes of this meeting. 
It was so ordered. 

The Committee appointed to prepare resolutions of respect on 
the death of Mrs. W. L. Chalmers, made the following report: 

It having been announced from the chair that the Great Adjuster, Death, 
has just appeared at the home of one of our oldest and most cherished mem- 
bers; 

Be it resolved by the Underwriters' Association of the Pacific that we mourn 
the demise of Mrs. W. L. Chalmers as a loss to her bereaved husband and 
family, and a loss to society; that in the ashes we recognize a beautiful 
structure, the worth of which it is beyond the power of human arbitration to 



45 

fix; and while our deep sympathy is bat poor compensation to the afflicted, 
we offer our sincere condolence to Mr. Chalmers and his family. 

Resolved, That a copy of these resolutions be furnished Mr. Chalmers by 
the Secretary of our Association. Z. P. Clark, 

Louis Mel, 
C. Mason Kinne, 
San Francisco, 15th February, 1881. Committee. 

President Spencer — The Library Committee have made no 
report. I called upon the chairman of that committee some 
time ago to make a report, and have called upon him several 
times since, but he has failed to report. 

Mr. Bromwell — Mr. President: Our library case is getting* 
too small for the use we put it to — in other words, I am glad to 
say that our library is increasing so fast that the capacity of our 
book-case is entirely too limited. I think it is a safe proposi- 
tion, Mr. President, to impose a little further upon the time and 
good nature of the Secretary of the Association, and I therefore 
move that the Secretary be empowered and instructed to dispose 
of the present library case and procure another, provided always 
that the funds of the Association will permit of the expendi- 
ture. 

Adopted. 

President Spencer — We have with us on this occasion our ex- 
President, and we are pleased to see him, and should be very 
glad to hear from him on this occasion. 

Mr. Hopkins — Mr. President and Gentlemen: I am getting 
gray and old enough to step aside and see the young men come 
to the front. I am very much delighted to see how much 
smarter the young men are than the older ones, if I dare sa}' so; 
but I am sorry you have asked me to say something when I have 
only to say that I bow my head to you with thanks in honor of 
superior talent. 

Mr. D. J. Staples being called upon, said: Mr. President and 
Gentlemen — I did not come here to make a speech. I did not 
have the pleasure of meeting with you last year when reports 
were made, but I read them afterwards and I was delighted. 
This year I was determined to come. I was called away early in 



46 

the afternoon, and I am not now surprised that Mr. Hopkins 
failed to appear at the meeting of the Marine School which was 
appointed at this hour. 

I will say, in my judgment, there is nothing that has trans- 
pired within the past fifteen years that has so much pleased me 
as this meeting of the underwriters. Mr. Hopkins and myself 
sit in the office and send our special agents over the country, 
and they make reports of the men they appoint, and of the diffi- 
culty and trials they have. 

I know that I am not fitted by nature to be a special, but I am 
delighted with the character of the men that have developed in 
the business. Mr. Hopkins will remember, perhaps, longer than 
I can how few men there were in this special line at one time 
here, taking care of the general interests over the State, and 
how they have grown up since, and this gathering yearly and 
quarterly is, in my judgment, the best thing that can be done. 

I have always advocated anything that would bring them to- 
gether and knock off the rough edges of competition, and some 
of these papers lead here to-day show that such meetings as 
these will be of good to all of us. I have not had the pleasure 
of meeting with you more than once or twice, but I will give you 
my word that, with your permission, gentlemen, I will come as 
often as I can hereafter. 

Col. Kinne — Mr. President: There seems to be a feeling that 
we are to have a meeting to-morrow, and that meeting seems to 
be in the way of work here to-day. To-morrow night when we 
assemble, it will be to enjoy ourselves in a different way from 
to-day. There are several reports that we ought to act on to- 
day. In your own report; Mr. President, you spoke of getting 
papers from honorary members, and that our Secretary ought to 
notify them in ample time for them to give us reports. I move 
that the Secretary in the future be instructed to invite honorary 
members to furnish something from their pens. 

Carried. 

Mr. Grant — Mr. President: Part of our duty to-day is to elect 
officers for the ensuing year, and I propose we do not postpone 
it until to-morrow evening. I do not think we want to introduce 
many business features into that meeting — that is to be more of 
a social gathering. I do not think it will take many minutes to 



47 

elect a President. I have a nomination to make, and wish to 
present the name of Mr. Bromwell, and in doing so, to say briefly 
here why I am satisfied Mr. Bromwell would make a good Presi- 
dent. He was one of the original members, and I am not sure 
but what he was the Association's original organizer. He is a 
young man, and lately a special with ourselves. When we first 
organized we had older men to fill this position, estimable men 
they were, and just such as we needed, but I feel that now w r e 
have found our age and able to stand alone, and for the next 
year I now propose the name of Mr. Bromwell as President. 

Nomination was seconded. Nominations closed, and Mr. 
Bromwell declared elected. 

President Spencer — Gentlemen : Mr. Bromwell has been 
•elected my successor, and I extend to him a most hearty wel- 
come to the chair. I believe, as Mr. Grant suggested, that Mr. 
Bromwell was the originator of this society, and I am sure that 
he is the most fitting member we have among us for the posi- 
tion. 

Mr. Bromwell replied— Gentlemen of the Association: It is 
with unfeigned pleasure and pride that I accept the position as 
your presiding officer for the current year. For your esteem 
and confidence, and this pleasing evidence of it, I am especially 
grateful. I do not forget that, some five or six years ago — in 
1875 I believe it was — that a handful of us met at Virginia City, 
huddled together in an ordinary sleeping car. There was our 
smoothy Clark, our painstaking Spencer, the practical Bailey, and 
the silver-tongued Dornin; the gay, festive and at the same time 
plodding and prudent Grant; and last, but not least, your mod- 
est President. We there shook hands together and adopted the 
time-serving motto, " In Union there is strength, " and we or- 
ganized thereupon by resolution of mine, it is true, that we asso- 
ciate ourselves together for the simple purposes — drowning of 
selfish interests, and the promoting of our whole interests as a 
corporate body of adjusters. I am particularly pleased at this 
annual meeting to say — and I am not assuming too much in so 
doing — that a great many of those benefits have been realized 
and are constantly being realized. 

I will not take up your time, gentlemen, by any extended re- 
marks, but again sincerely thanking you for this mark of your 



48 

esteem, we will now proceed to finish the business of the meet- 
ing by asking nominations for Vice-President. 

Mr. Clark — Mr. President: I take pleasure in placing in nom- 
ination for Vice-President for the next year the sweet singer 
from Michigan, Mr. George F. Grant, nominally related to the 
presidential family, but not afflicted with any of its vices. I 
have known him long and well, and am sure he will make a good 
Vice-President. 

Seconded and carried. 

Mr. Grant — Mr. Chairman and Gentlemen: I thank you very 
kindly for the honor you have conferred upon me in nominating 
me for this office. I never in my life heard 6f a Vice-President 
making a speech, and I never knew of a Vice-President doing 
anything, and I therefore have no hesitation in accepting this 
office, and I thank you for it. 

Mr. J. W. Staples was duly elected by acclamation to succeed 
himself as Secretary and Treasurer of the Association. 

The following Executive Committee w r as declared elected to 
serve for the present year: Geo. W. Spencer, E. W. Carpenter, 
C. Mason Kinne. 

After the discussion of minor matters, such as appointment of 
committees and their notification, the Association adjourned to 
meet at the Maison Doree for their annual banquet next day. 



SECOND DAY. 

ASSOCIATION BANQUET. 



On the evening of the lGth, about fifty persons — members and 
invited guests — sat down to the annual dinner, given at the 
Maison Doree. The spread was all that skill could devise, and 
music lent its charm. "With coffee and cigars came a feeling of 
serenity reflected on the face of each one. Mr. George W. Spen- 



49 

cer presided over the feast in such a happy, felicitous manner 
that the youngest member was encouraged to give voice to his 
thoughts. 

Toasts were discarded and impromptu speeches the order of 
the evening. Colonel Kinne made a decided hit. The places of 
honor near the President were shared by Messrs. Touchard, D. 
J. Staples, Boardma/i, Forman, Houghton, Hutchinson, Elliott 
and Haven, who gracefully answered the chairman's call. 

Mr. Callingham rendered an original song, which was loudly 
applauded. In reply to the demand, he gave for an encore one 
of his best. Mr. Callingham's repertory is inexhaustible. George 
Grant was very happy and responded cheerfully with a fund of 
song and recitation. At midnight the band played " Auld Lang 
Syne," and all voices joined with heartfelt harmony. Hand- 
shaking and good-byes followed, and a spirit of good fellowship 
established then and there which never had existed before. 

MR. CALLINGHAM'S SONG. 

A MOTTO FOR AN INSURANCE MAN. 

My friends, we have met in our own social way, 

Where all may be happy, you know ; 
But whilst music and wine make us gladsome and gay, 

We'll think of the duties we owe — 
We'll drink to the friends who have ever been kind, 

Who will stand by us all when they can, 
Advice in my song you will certainly find, 

And a motto for an insurance man. 

Chorus— So we'e will sing and banish melancholy; 

Troubles may come, we'll do the best we can 
To drive dull care away, for grieving is a folly, 
Put your shoulder to the wheel 
Is a motto for an insurance man. 

In our business pursuits, when troubles arise, 

Our principle is to adjust — 
To act on the square is prudent and wise, 

Each brother in business to trust: 
The merits of each we rate at the best, 

Their exposure we gladly hide, 
Nor seek for a fault in the east or the we6t, 

In faith with each brother abide. 

Nor can we forget our adjusters and specials, 

Their trips and their troubles are legion; 
We have seen not a few hang on to a trestle, 



50 



Or the limb of a tree grimly freeze on. 
On the road they are known as the stage-drivers' friend; 

Oft times they have carried the stage 
Their grit and their shoulders, if ever they bend, 

'Tis sorrow and care to assuage. 

We know what hard fare and rough tack they must take 

When traveling a loss to report. 
To-day, chills and ague; to-morrow, an ache; 

On duty each hardship'they court; 
They'll fight to the death for justice and right, 

Nor do they forget the assured ; 
Their duty they do making sad hearts light, 

When fair play is fairly secured. 

We drink to the health of our chieftains all, 

For jolly good fellows are they; 
Though fat and at ease they answer each call, 

And their losses with promptness pay; 
We'll drink to our aids and our brokers too; 

No small share of the work is theirs 
Though some time proposed to cut rates 'tis true, 

But we all have our troubles and cares. 

And whilst we are glad and our wine cups are full, 

Let us drink to our home offices too; 
They are men we esteem, and never will pull 

A man who his duty will do. 
They have stood by us all when calamity came 

And strengthened us every one ; 
And when our slight faults they have honestly blamed, 

'Twas kindly and gently done. 

And now, old friends, let us drink to ourselves, 

Our homes and our household gods, 
To our wives and our sweethearts, the dear little ones, 

Against the world we give them the odds. 
Whilst we gladden their hearts we gladden the world; 

For gladness is catching you know; 
So up with your glasses love's banner unfurled, 

We'll drink to them all ere we go. 



COMMISSIONS AND COMPENSATION TO SUB-AGENTS. 



A paper read by W. J. Callingham before the quarterly meet- 
ing of the Fire Underwriters' Association of the Pacific, held in 
the Board Booms, San Francisco, November 16th, 1880. 

This is a very important question for the consideration of underwriters, in 
fact, every thinking man interested in the management and success of his 



51 

company, or companies, should give this grave subject his consideration and 
aid in counteracting the demoralizing effects, which have already shown 
themselves, and will, unless controlled, prove a stumbling block in the path- 
way of harmony among the underwriters of the Pacific Coast. 

The beginning of this demoralizing influence was brought about by some 
few companies endeavoring to gain an advantage over their competitors by 
offering the inducement of extra and excessive commissions, to secure upon 
their books certain classes of hazards, and possibly, under the rates then ob- 
tained, were in a position so to do, and trust to luck for a small margin of 
profit. 

When once the ice was broken, other companies began to fall in, and made 
the additional commissions cover on all classes of hazards, which became the 
rule and not the exception, and so this great and unnecessary evil continues 
to grow and is still growing. 

When I first started in the field for the North British and Mercantile In- 
surance Company, in 1868, the rule was to make your arrangements for 
country representation upon a 10 per cent, basis, since which time they have 
been advanced to almost a universal 15, 17%, 20 and 25 per cent., and possi- 
bly in some and perhaps many instances exceeding even these disproportion- 
ate amounts of the premiums received. This unearned, and I think I am 
right in saying, ridiculous payment of commissions to sub^agents and brokers, 
results in a serious loss to all well established general agency officers, by the 
multiplication of middle-men; then again, this very excessive compensation 
naturally encourages the broker element, and places them in a position to 
dispose of a part of their commission to the assured, and really do better by 
his patron than the offices themselves, if they stick fairly and squarely to the 
rules and restrictions of our Board of Underwriters. 

This state of affairs, brought about by the companies themselves, through 
their officers and general agents, as a very natural consequence greatly in- 
creased the already formidable army of brokers, middle-men and so-called 
agents, which very necessarily brought about a very sharp competition (which 
is slill existing in our midst), and opened the door for the broker, middle-man 
and agents — in fact, any one placing business to do so with companies that 
were the greatest demoralizers, by becoming the highest bidder for the busi- 
ness. 

From these causes companies and general agents' expenses have been in- 
creased from the good old days of 10 per cent., to the exorbitant figures as 
before stated, and the result is that the first-class Board companies and agen- 
cies suffer by this change and demoralizing influence. 

These serious causes and processes are in active operation among us at 
this time. The stability and only safeguard we have from utter demoraliza- 
tion, viz., the Board of Underwriters, is threatened and imperiled. Com- 
panies and general agents' expenses are increased by these increased com- 
missions brought about by reckless short-sighted greed for business. With 
the existing rates it can be demonstrated that there is a very small margin of 
profit in the business, therefore any additional expenses incurred must in- 
evitably bring loss. This period seems to have arrived, and it concerns 
every field man, officer and general agent. We, all of us, in our respective 



52 

fields and duties, take pride in profitable results, and if, year after year, the 
results show a continuous loss, whether from causes within or outside of our 
immediate control, the day of reckoning must come, and you, gentlemen of 
the field, will have to take your share of the responsibility as well as officers 
and general agents. It concerns every one of us that feels interested in the 
prosperity of our companies and in profitable results, to watch closely and 
make it our business to see that expenses and losses do not exceed incomes. 
Commissions being one of the largest items of expense, it behooves you all, 
as special and supervising agents, to use your influence with each other, and 
in the field, towards confining this matter of commissions and compensation, 
of whatever nature it may be, whether in the form of allowances for office 
rent, horse and buggy, expressage, postage, exchange, or a bonus of any kind 
or form, to a fair remuneration for services rendered, which should be in a 
reasonable proportion to the income. And also place it out of the power of 
the agent to divide or rebate any portion of said commission, thereby deviat- 
ing and tampering with the tariff and rules of the Board of Underwriters. 
Do not throw the responsibility from your shoulders to those of superior 
officers, managers and general agents and say that this is a matter for their 
decision. This is true to some extent, but in your positions in the field your 
influence can be used in aiding them to a clearer judgment of the position of 
things in the field, for it is through you that they obtain the information 
upon which the machinery is run. You are accountable to them, and they 
in turn are responsible to the companies and stock-holders, whose funds they 
administer. If mismanagement ruins the company all suffer alike, and it is 
gross mismanagement that permits expenses and losses to exceed income 
year after year, and as losses are not a fixed sum, while expenses may be 
limited, it is sound reasoning to expect they will and of right ought to be. 
The business for the past year as an aggregate has not paid an average mar- 
gin of profit of 3 per cent. 

The following statistics, taken from the report of the National Board Com- 
mittee on Statistics, made April 28th, 1880, prove the fact: 

The total amount paid in 1879 for fire premiums $53,677,098 87 

Marine and inland premiums 6,368,831 40 

$60,045,930 27 

Total amount paid in 1879 for fire losses $31,542,243 23 

Marine and inland losses 5,151,298 62 

Expenses 21,033,756 64 

57,727,298 49 

Showing that losses and expenses for the year were 95 95-100 of the pre- 
miums received. 

The profits on the whole business for 1879 were $2,318,631 78 

Deduct profits of the foreign companies 683,406 14 

Leaving $1,635,225 64 

as the net for American companies for 1879, or 2 38-100 per cent on the 
amount of capital invested. 

Thus is shown the profit on underwriting account for 1879. The dividends 
paid, amounting to $7,544,883, were obtained from investment or interest ac- 
counts. This showing does not reflect much credit upon fire underwriting, 



53 

and it must be remembered that this money would have produced this 
amount of interest if no policies had been issued. 

The time has arrived for underwriters of the Pacific Coast to profit by the 
experience of the older and more experienced States, and turn their attention 
to the reduction of expenses in our business. True wisdom, contemplating 
the best interest of agents as well as companies and their permanent aids, 
suggests a united effort towards a return to reasonable compensation and 
commissions to agents. W. J. C. 



LIST OP OFFICERS FOR 1881. 



L. L. BROMWELL President. 

GEO. F. GRANT Vice-President. 

J. W. STAPLES Secretary and Treasurer. 

Executive Committee, 

Geo. W. Spenceb, E. W. Cabpenteb, C. Mason Ktnne. 

Standing Committees for 1881. 

LOCAL AGENTS. 

O. H. Cole, Louis Mel, W. W. Haskell. 

FOEMS OF POLICIES. 

C. Mason Kinne, A. P. Flint, Wm. Sexton. 

LOSSES AND ADJUSTMENT. 

Z. P. Clark, J. R. Garniss, S. E. Strickland. 

LEGISLATION AND TAXATION. 

A. D. Smith, W. J. Landers, J. F. Houghton. 

FIEE DEPAETMENT AND WATEE SUPPLY. 

S. B. Riggen, W. P. Thomas, C. M. Nichols. 

STATISTICS. 

E. Brown, Geo. W. Spencer, S. O. Hunt. 

LIBEABY. 

Jas. W. Staples, W. J. Callingham, R. H. Naunton. 

CALIFOENIA KNAPSACK. 

C. Mason Kinne, Manager, Geo. F. Grant, Associate. 



LIST OF MEMBERS. 



L. L. Bromwell, Vice-President, California Insurance Company. 

Geo. F. Grant, bpecial Agent and Adjuster, North British & Mercantile & 
German-American Insurance Companies. 

Z. P. Clark, Special Agent and Adjuster, Hutchinson & Mann agency. 

Wm. Sexton. Special Agent and Adjuster, Fireman's Fund Insurance Com- 
pany. 

A. D. Smith, General Agent, Northwestern, Amazon, and Fairfield Insurance 
Companies. 

Wm. Doolan, Special Agent and Adjuster, State Investment and Insurance 
Company. 

Geo. W. Spencer, Manager, London & Lancashire and Manchester Insurance 
Companies. 

J. W. Staples, Special Agent and Adjuster, London and Lancashire and Man- 
chester Insurance Companies. 

E. Brown, General Agent, Phenix, Star and other Insurance Companies. 

A. J. Bryant, President, State Investment and Insurance Company. 

J. R. Garniss, Adjuster, 320 Sansome St. 

J. D. Bailey, General Agent, Union Insurance Company. 

A. R. Gunnison, Special Agent and Adjuster, Commercial Insurance Com- 
pany. 

Robert Dickson, Manager, Imperial, London, Northern, and Queen Insur- 
ance Companies. 

Geo. D. Dornin, Secretary, Fireman's Fund Insurance Company. 

*Henry Smith, Special Agent and Adjuster, Liverpool & London & Globe 
Insurance Company. 

H. W. Snow, General Agent, American Central, Metropole and Reassurances 
Generales Insurance Companies. 

W. J, Landers, General Agent, Guardian Assurance Company. 

E. E. Potter, General Agent, Oakland Home and other Insurance Companies. 

J. F. Houghton, President, Home Mutual Insurance Company. 

W. J. Callingham, General Agent, South British and National Insurance 
Companies. 

tD. L. Kirby, Associate Manager, Royal Canadian Insurance Company. 

tW. W. Dudley, Illinois State Agent, German-American Insurance Company. 

Wm. MacDonald, Special Agent and Adjuster, Imperial, London, Northern 
and Queen Insurance Companies. 

C. T. Hopkins, President, California Insurance Company. 

W. L. Chalmers, Special Agent and Adjuster, Hutchinson & Mann's Agency. 

J. R. Hamilton, General Agent, Commercial Union Assurance Company. 

T. C. Grant, General Agent, North British & Mercantile and German-Ameri- 
can Insurance Companies. 



56 

Chas. H. Cushing, Secretary, State Investment and Insurance Company. 

*W. J. Stoddart, Agent, New York Underwriters' Agency, etc. 

A. P. Flint, Manager, Hartford Fire Insurance Company. 

Hugh Craig, General Manager, New Zealand Insurance Company. 

H. R. Mann, Agent, Hutchinson & Mann's Agency. 

Julius Jacobs, Agent, Jacobs & Easton Agency. 

Geo. Easton, Agent, Jacobs & Easton Agency. 

t Jas. Kip, formerly of the London Assurance Company, 

Samuel D. Mayer, City Agent, Commercial Union Assurance Company. 

Dave Rorick, Perry, Jefferson Co., Kansas. 

C. P. Ferry, Inspector of Agencies and Adjuster, Portland, Oregon. 
IE. E. Ryan, Agency, 110 La Salle St., Chicago, 111. 

Oliver Hawes, General Agent, Connecticut Fire Insurance Company. 
S. O. Hunt, Agent, Jonathan Hunt, Son & Co's Agency. 

D. J. Staples, President, Fireman's Fund Insurance Company. 

Wm. Frank, General Agent, Hamburg-Magdeburg Fire Insurance Company. 
*Henry Balzer, Agent, Svea, North German, and Helvetia Insurance Co.'s. 
L. Beck, City Agent, Phoenix (London), British America, and Western 

(Canada), Insurance Companies. 
C. M. Nichols, Surveyor of the Board of Fire Underwriters. 
C. J. Van Tassel, General Agent, Continental, Niagara, and Commonwealth 

Insurance Companies. 
O. H. Cole, Adjuster, Continental, Niagara, and Commonwealth Insurance 

Companies. 
T. A. Mitchell, Agent, Jonathan Hunt, Son & Co.'s Agency. 
F. F. Stone, Agent, Lamar and Allemania Insurance Companies. 
C. Mason Kinne, Special Agent and Adjuster, Liverpool & London & Globe 

Insurance Company. 
P. Outcalt, Adjuster, 320 Sansome St. 

J. C. Jennings, General Agent, Manufacturers' Insurance Company. 
Geo. E. Butler, General Agent, S. F. Agency Phoenix Assurance Company of 
London, British America, and Western Assurance Companies of 
Canada. 
Chas. D. Haven, Secretary Union Insurance Company. 
E. W. Carpenter, Special Agent and Adjuster, Fireman's Fund Insurance 

Company. 
tW. N. Olmsted, 62 Cedar St., Room 10, New York City. 
Geo. W. Dornin, with Fireman's Fund Insurance Company. 
W. P. Thomas, Special Agent and Adjuster, South British and National In- 
surance Companies. 
W. W. Haskell, of firm Brown, Craig & Co. 

Louis Mel, Special Agent and Adjuster, Royal, Norwich, Union, and Lan- 
cashire Insurance Companies. 
J. P. Cox, with Hutchinson & Mann's Agency. 

tJ. G. Edwards, Editor Coast Review, 320 Sansome St., San Francisco. 
tA. Hill Jack, General Manager, National Fire & Marine Insurance Com- 
pany of New Zealand, 



57 

R. E. Drake, Special Agent and Adjuster, Jacobs & Easton Agency. 

R. H. Naunton, Special Agent and Adjuster, Commercial Union Assurance 
Company. 

Jno. C. Staples, Special Agent and Adjuster, Hutchiuson & Mann Agency. 

T. E. Pope, Special Agent and Adjuster, iEtna Insurance Company. 

S. E. Strickland, Special Agent and Adjuster, Butler & Haldan Agency. 

S. B. Riggen, Special Agent and Adjuster, Counecticut Fire Insurance Com- 
pany. 

Alfred Stillman, General Agent, Manhattan Fire Insurance Company, New 
York. 

W. G. Elliott, General Agent, Commercial Fire and United Fireman's Insur- 
ance Companies. 

Rudolph Herrold, Surveyor, Hamburg-Bremen and other Insurance Com- 
panies. 

* Deceased. t Honorary Member. 



PROCEEDINGS 



OF THE 



SIXTH ANNUAL MEETING 



OF THE 



FIRE UNDERWRITERS' 



Association of the Pacific, 



HELD AT 



San Francisco, California, February 21st, 1882. 



Printed by Order of the Association, 



SAN FRANCISCO: 

George Spaulding & Co., Steam Book and Job Printers, 

414 Clav Street, below Sansome. 

1882. 



PROCEEDINGS 

OF THE 

SIXTH ANNUAL MEETING 

OF THE 

FIRE UNDERWRITERS' ASSOCIATION 

OF THE PACIFIC. 



The Sixth Annual Meeting of the Fire Underwriters' Associa- 
tion of the Pacific, was held in the rooms of the Board of Fire 
Underwriters of San Francisco (216 Sansome St.), at eleven 
o'clock a. m., on the 21st day of February, 1882. 

L. L. Broinwell, Esq., President, in the chair. 

The following members of the Association were present dur- 
ing the session: Messrs. L. L. Bromwell, Esq., President, Geo. 
F. Grant, Z. P. Clark, A. D. Smith, Geo. W. Spencer, A. J. 
Bryant, J. R Garniss, A. R. Gunnison, Geo. D. Dornin, E. E. 
Potter, W. L. Chalmers, A. P. Flint, Julius Jacobs, Oliver 
Hawes, S. O. Hunt, D. J. Staples, C. M. Nichols, O. H. Cole, 
T. A. Mitchell, C. Mason Kinne, Geo. E. Butler, E. W. Car- 
penter, J. G. Edwards, R. H. Naunton, T. E. Pope, W. G. 
Elliott, Chas. P. Farnfield, L. B. Edwards, Homer A. Craig, 
Edward Farnsworth, J. W. Staples. 

Mr. R. H. Drake, being no longer in the insurance business, 
ceases to be a member. 

President — The Secretary will read the minutes of the last 
quarterly meeting 



The minutes were read, and no objection being made, were- 
ordered to stand approved as read. 

Minutes of special meeting held Dec. 27th, 1881, were then 
read and approved. 

Secretary — Mr. President, before we proceed to the regular 
order of business I would make a motion, that the regular order 
of business be suspended, and we proceed to the election of 
members, as there are applications of Messrs. H. A. Craig, W. 
J. Dutton and Edward Farnsworth for membership, and these 
gentlemen are desirous of being present and participating in the 
deliberations of this meeting. 

The motion was duly seconded and carried. 

Secretary — I have here the application of Homer A. Craig,, 
who is associated with Messrs. Brown, Craig & Co. 

On motion, the Secretary was instructed to cast the affirmative 
vote of the Association for Mr. Craig — this being done, Mr. H. 
J A. Craig was declared duly elected. 

The same course was pursued in the cases of Mr. Wm. J. 
! Dutton, Secretary of the Fireman's Fund Ins. Co., and Mr. 
Edward Farnsworth, of Farnsworth & Son, both being declared 
duly elected. 

President — I now call for the Treasurer's Eeport. 

Treasurer — Mr. President and gentlemen: The Treasurer's 
Report is simply a plain statement of receipts and expenditures, 
and requires no comment or explanations. 

TREASURER'S REPORT. 

Fire Underwriters' Association of the Pacific in account with J. W. Staples, 

Treasurer. 

1881. Dr. 
Feb. 15. Balance on hand and in Bank $5112 18 

1882. 

Feb. 21. Received from dues and fees 172 50 

$284 68 



*1 


5o 


5 


00 


18 


90 


7 


50 


74 00 


2 


00 


5 


25 



1181. Cr. 

Feb. 15. Paid telegram to Hon. J. A. Brumsey, Carson... 

11 21. " bill, J. G. Hilzinger, electric pen work 

11 " " Ins. Times, Spectator, Monitor, Law Journal, 
Coast Revieiv and P.O. orders 

M " " D. Hicks & Co., binding ins. papers (2 bills) 
Mch. 23 " Geo. Spaulding & Co., printing 225 copies. . 
Aug. 13. " CM. Nichols, moving Library 

" " " John Wallace, printing postal cards (3 bills). 
Dec. 24. " J. W. Staples, salary 50 00 

" " " A. L. Bancroft & Co., "Woodson Ins." 6 50 

" 28. " \V. J. Heney & Co., Library Case.... 42 00 

Jan. 28. " J. D. Haines, electric pen notices 100 

Feb. 20. " California Ins. Co. policy, No. 21,587 3 00 

" " '• Postage at various times 50 

" " *' C. W. Gordon, printing 2 25 

Balance 65 23 

$284 68 

Cash on hand , $2 65 

€ash in Bank 62 58 

$65 23 

J. W. STAPLES, Treasurer. 
San Francisco,' Cal., Feb. 21, 1882. 
E. &O.E. 

PRESIDENT'S ADDRESS. 

President Bromwell then delivered his Annual Address as 
follows: 

Gentlemen of the Underwriters' Association of the Pacific: 

The occasion has again arrived when our yearly dues to Father Time are 
to be summed up and settled; from the Journal of past experiences we have 
met for the regular posting into the Association Ledger, the debits and credits 
of a progressive fellowship; in the calm of meditation and reason we shall, at 
this halting, strike the Sixth Annual Balance Sheet, and as far as practicable, 
apply its results toward polishing, at least, the perturbation of our business 
future. Following up the simile, there is no necessity of any dissimulation 
in handling the cross entries of past accounts — the sine qua non of our peri- 
odical grouping is neither sentimentality nor sociability, but rather to satisfy 
the demand of enterprising minds for discussion, reflection and improvement; 
to eliminate from our practice all elements of a pernicious or disturbing char- 
acter; to foster, encourage and perpetuate a code of principles, calculated to 
stimulate and fortify the business, and last, but by no means least, elevate 
the professional standard of the special and adjusting agent. 

That old-time axiomatic truth, "the corruption of the best is productive 
of the worst," has asserted its demoralizing influence throughout all com- 



inercial and social life, but in no other calling have its effects been more fully 
realized or appreciated than in that of Fire Underwriting. Conceiving this 
fact to be incontrovertible, I must be excused from any sugar-coating of the 

RETROSPECTIVE 

Of this address when dealing with matters or things opposing the future 
best interests, either of the business or of this Association. It will not 
tax the memory of many of us to recall the period when our premium in- 
comes were secured by slanderous and reprehensible means, retained by 
similar practices, and losses generally adjusted with a total disregard of 
honorable or trustful courtesy as between interested adjusting colleagues. Up 
to the memorable Chicago, Boston and Virginia City fires, the man who could 
with equal cunning and skill, pretend to be what he was not, or not to be 
what he really was, filled the measure of an average underwriter. In fancied 
security, he looked with indifference upon the dangers of others until " Gen- 
eral Conflagration," the great leveler of the fraternity, made misfortune a 
common inheritance, and compelled the recognition of that unity of interests, of 
which this Association is but one of the outcroppings. We cannot pretend 
that this organization has accomplished even a moiety of its mission, nor 
can we hope for an unfolding and bountiful harvest of good which the soil 
must eventually yield to the seed we so diligently plant from year to year. 
A business that has cultivated distrust in the past as a policy, must undergo 
many and serious trials, both within itself and with a public keenly sensitive 
to its shortcomings, before souls as well as soils, can conquer inherent rank- 
ness and liability to weedy suspicion and consequent knavery, artifice and 
stratagem. If association be expedient in times of wholesale disaster, how 
indispensable and necessary to prepare us for conflict and intelligent defense. 
The underwriter in these advanced days who voluntarily sits apart from his 
brotherhood in settled distrust, breeds mischief, and will always bear watch- 
ing. We are glad to say, however, that these suspicious obliquities are now 
the ridiculous exception, certainly not the rule with 

OUR HONORABLE FRATERNITY. 

The first meeting for contemplation of this organization, was held in the 
"Palace Hotel Car," Virginia City, Nevada, October 28th, 1875, at which 
thirty-four of our members were present. In December following, the idea 
took permanent shape, by the adopting of a Constitution and By-Laws, 
and a resolution perpetuating the Association as a "means of dissemina- 
ting valuable information, and elevating and promoting the interests of its 
members." From its inception, the Pacific Association has increased in 
numbers and usefulness. Our roll call now approximates seventy-five, but 
I find that eighteen of this number only, have furnished all the papers 
on practical subjects, during the five years of our existence — this same dere- 
liction of duty, likewise embarrasses our sister associations eastward There 
is manifestly too much shirking, and too many of us exhibit a total indiffer- 



ence as to the intellectual portion of the programme! Be it said, however, we 
have no stragglers at the feast following our quarterly and annual meeting. 
It is now in order for the large majority who have not heretofore honored us 
with their contributions, to furnish exemplary re'ief to thehardworked minor- 
ity, on whom thus far, have fallen the burden and heat of the day. 

"For as the light 

Not only serves to show, but render us 

Mutually profitable; so our lives 

In acts exemplary, not only win 

Ourselves good names, but to others give 

Matter for virtuous deeds, by which we live." 

At the risk of trespassing within the limits of cynicism, permit me at this 
juncture to refer in no uncertain language, to the slack attendance upon our 
quarterly meetings. Our business can scarcely be so pressing — our engage- 
ments hardly so exacting — as to prevent a respectable audience to those gen- 
tlemen invited to administer to our entertainment and instruction on these 
occasions. Eeasonable or acceptable excuses aie few, for this pointed dis- 
courtesy—for this almost unpardonable slight, to those who unselfishly labor 
to promote and aid our confederate interests. The Association is not self -ope- 
rative, and attendance upon all meetings, is a primary duty to be religiously 
observed, or we retrograde from a practical and useful Association, down to 
the level of a mere sentimental side-show. 

During the past year it was my privilege, as your representative, to visit 

THE FIEE UNDERWRITERS' ASSOCIATION OF THE NORTHWEST, 

And be present at the Twelfth Annual Meeting, held at Chicago, September 
14th and 15th. Honored with the prerogative of the floor, and a cordial and 
sincere welcome, I was at once made to "feel perfectly at home." Without 
encroaching upon the authority or peculiar views of executive management, 
the field workers composing that Association, intelligently unravel the intri- 
cacies of hazard, agency and adjustment, and have grown in power and influ- 
ence, until as an important adjunct to the Northwestern business, the Associa- 
tion is well nigh indispensable. Their meetings are well attended, and are 
signalized by debate and discussion of inestimable benefit to participants and 
the profession at large. I bear to you, gentlemen, in response to your greet- 
ing to them on the occasion referred to, honest and hearty expressions of good 
will and fraternal esteem. If the opportunity is ever accorded us of receiv- 
ing a Northwestern committee, I bespeak unstinted reciprocity on the part of 
this Association, for their courteous hospitality to your representative. 

I now approach, with some diffidence, the recommendatory portion of my 
address, looking to the 

PROSPECTIVE 

Increased usefulness of the organization; I confess diffidence, because I feel 
incompetent to awaken that increased and wholesome interest on the part of 



members, so necessary if the purposes of- our confederation are to be fully 
and completely carried out. The few who have thus far created and preserved 
the Association by work, are regarded as very little short of milling machine?, 
into which are gathered the facts to grind out free grist quarterly and an- 
nually for the general fraternity. We must continue the presentation of 
papers by rotation, covering the almost immeasurable range of our business, 
without, of course, intruding upon the limits of executive management; the 
researches of a Special and Adjuster as such in this ever-varying business, 
are almost boundless, and if the application is made of labor's results, we 
will exhibit a healthy progress, and ultimately win the reward of approval we 
strive for. If we shall resolve ourselves into husbandmen all, and — 

" Not leave the tending of our vines 
For the heat o' the sun, till it declines," 

Our future will be fruitful, and the yield compensative and satisfactory. In 
this connection, also, permit me to advise that all papers hereafter submitted 
receive necessary time for discussion and debate, for "what we now defend 
by example will at future periods stand as precedent." Sifting of our subjects 
by debate better qualifies us for argument generally, and more than all else, 
contributes to the permanent lodgment of facts in our minds for ready future 
reference and use. 

CONTRIBUTED PAPERS SHOULD BE REFERRED TO APPOINTED COMMITTEES 

For an immediate leporting of their salient features, and thus present to the 
association in a condensed shape all such points as are debatable. To make 
these discussions valuable, effective and productive, every member should 
actively participate; there is no doubting the virtue of an argumentative 
review of all our topics, when fresh and directly after they are presented. 

As a means of further enhancing the usefulness of this association, I beg to 
submit for your consideration the propriety of maintaining a record of all per- 
fidious and untrustworthy agents within the Coast jurisdiction. The stand- 
ing Committee on Local Agents can from year to year pass in judgment on 
cases brought to its attention, and all instances of unfaithfulness reported to 
the Secretary for registry in the Black Book, with or without the evidence or 
causes of conviction. It is due the host of agents forming the great factor in 
our business success, and who are capable, diligent and honest, that the impo- 
sitions ilk who betray our trusts and are totally lacking in honor, fidelity or 
truthfulness, should be branded and advertised amongst ourselves, as 

BLACK SHEEP TO BE AT ALL TIMES AVOIDED. 

Every agent holding a commission of authority, makes for himself a reputa- 
tion with his headquarters — good, bad, or indifferent; and the fractious trans- 
gressors of correct practices only feel the restraint of law or the results of 
exposure. In compliment to such of our correspondents as we esteem and 
appreciate, as well as to fortify our calling against the plague sores which 



occasionally disease the whole system, I recommend measures of this kind to 
be religiously followed up as a part of our associate duties. The wholesome 
exercise of prudence in bestowing these important trusts would elevate and 
make the position of Local Agent as much respected as it is respectable and 
honorable. 

At our quarterly meeting held in August last, one of the members was 
denied a committee, before whom could be discussed the merits or demerits 
of an adjusting problem. There may have been some good reason not ap- 
pearing on the minutes for such refusal, bat I warn the Association that we 
must not shirk our responsibilities in this direction, and avoid the free dis- 
cussion and interchange of opinions, on all topics likely to improve the 
status of our business — especially as regards the niceties and intricacies, be- 
setting loss apportionments or adjustments. It is one of our highest privi- 
leges as contributing members of the association, to not only ask, but exact 
your corporate assistance towards disentangling the kinks and smoothing 
away the worries of ill defined rules of practice. 

THE QUESTION OF REFORMING PER DIEM CHARGES FOR ADJUSTING, 

Which was by motion duly submitted to the standing Committee on Losses 
and Adjustments, will be brought before you in the shape of a committee 
report at this meeting. It is a mistaken notion that we have the power to 
govern absolutely, the charges to be made for service of this character, but a 
rule which admits incompetency to the same remuneration as is paid to 
skill and diligence, and seemingly prevents the latter from receiving the 
worth or value of merit, should not be allowed to cumber our record. Every 
particular adjustment, as well as the particular adjuster employed, demands 
especial compensation, which no fixed or uniform rule can justly apportion 
or be made fairly applicable. The service rendered as shown by the face of 
an adjustment, and its results — the attending circumstances with the work and 
talent employed, should more largely enter into the calculation of value as to 
service rendered, than mere physical discomforts or inconveniences of travel. 
I take the liberty of making reference to the proposition, because the argu- 
ment advanced in support of the proposed reduction in schedule charges is 
based upon the improvement, and resultant comforts of our travelling facili- 
ties, as if this cut any important figure in the "wear and tear" of the 
*' upper story," if adjusters faithfully and assiduously prosecute their un- 
dertakings. 

THE FRATERNIZING OF PROGRESSIVE UNDERWRITERS, 

Has proven itself not only expedient and suited to the times, but especially 
adapted to the special agent and adjuster; while our individual interests may 
diverge for a time, there is, neverthless, a common bivouac where we must 
all encamp, if the governing laws and principles of insurance are to be util- 
ized, and the best interests of the business subserved with dignity and 
credit. We must cultivate trustfulness and fidelity amongst ourselves, if we 
are to win by fructification the results of grafting the varied experiences of 



10 



others. Only by the closest of communion and perfect understanding, can 
we successfully cope with the prejudices of legislators, judges and juries, who 
simply mirrorize public opinion after all. As certaiuly as the crimes of 
incendiarism and fraud are intrenched as formidable enemies of underwrit- 
ing, so certain is it that we must mass our forces and make common de- 
fense, or acknowledge that we encourage and promote crime. Association 
is the key to a thorough knowledge of our brotherhood. Commingling of 
this character, impels greater regard, personal attachments and lasting 
friendships, which in turn procreates loyalty, probity, honesty, honor! Our 
estimates of each other, without companionship, are frequently erroneous 
and unjust, filling life as well as business, with discord and distemper, and 
iu the end, reach with pernicious effect, 

THE INNERMOST COEE OF OUR RESPECTIVE INTERESTS. 

We must remember that 

"Within the oyster's shell uncouth 
The purest pearl may hide," 

And forbear invoicing the qualities of the man, until we have broken 
through the exterior and invaded by ripe acquaintance — the interior. Now 
and then in the path of observation, we have seen the rough outside and 
almost repelling front, suddenly melt away and reveal a character warm and 
fraternal — a heart loyal and tiue — the veritable soul of honor and faithful- 
ness. As an evidence of our fraternity, as well as to keep green our re- 
collections of their many virtues, I desire to here call the roll of those of 

OUR NUMBER WHO HAVE CROSSED THE UNKNOWN GULF 

Since the date of our organization, and whose lasting slumber, while 
furnishing them coveted rest and peace, fill us with saddened awe on these 
occasions of re-union. 

The first to fall and wrench with sorrow the heartstrings of all who knew 
him, was our beloved Harry Smith. Next in order, the patient and plodding 
W. J. Stoddart; and lastly, the warm-hearted and genial Henry Balzer. 

We "will preserve and keep fresh like flowers in water," the memory of 
those lives which linked with ours in the past, have only preceded, not for- 
saken us. 

In conclusion, let me impress upon the minds of our underwriting fam- 
ily these important thoughts: The remaining portion of our brittle lives is 
marked by the horizon of earth and sky, just before us — from the fated 
road on which we hurry forward, we cannot turn to the right or left — 
the time left us for action is limited at best, and duty to ourselves requires 
that our aims and purposes should be promptly carried out — our friendships 
fast and unwavering — that when the curtain falls on life's busy stage, we 
shall leave some other epilogue than the mere record of an unimporlant 
death. 



11 



We should- 



"Live in deeds, uot years — in thoughts, not breaths. 
11 In feelings, not in figures on a dial; 
We should count time by heart-throbs. 
" He most lives, who thinks most — feels the noblest— acts the best." 

President — Gentlemen, we are now ready for the Report of the 
Committee on Local Agents, Mr. O. H. Cole, Chairman. 

Mr. Cole — Mr. President, two years ago it was my misfortune 
to follow an address by my friend Carpenter; now it seems to 
be my misfortune to follow an able address by yourself — still, 
we will do the best we can. 

REPORT OF COMMITTEE ON LOCAL AGENTS. 

Mr. President and Gentlemen of the Fire Underwriters' Association of the 
Pacific — The intimate relations existing between the Local Agent and the Spe- 
cial, so closely connect the two, that it is extremely difficult, not to say im- 
possible, to bring into notice any of the duties pertaining to the one, with- 
out, to a certain extent, entering upon the sphere of the other. While 
therefore, we are supposed to confine ourselves to the Local Agent, and 
to his particular province, we beg your indulgence if we partially diverge 
from the technical path, and offer in connection herewith some suggestions 
bearing not only upon the duties of a Local toward his company, but also 
upon the Special's towards the Local. In a section of country so vast, in a 
geographical sense, as is the Pacific Coast, yet owing to its comparative 
youth, so undeveloped and sparsely settled, the duties of the Special Agent 
may be said to differ somewhat from those of his contemporary in the 
East; and while, in the theory, very little difference may exist, its practice 
naturally varies, and we find ourselves oftentimes compelled to deviate from 
the customary usages of our profession, and to devise some new plan to con" 
form to the exigencies of the occasion. 

THE CONSTANT ACCESSION TO OUR RANKS, 

Brought about by the various changes incident to the business, naturally 
brings with it increased competition, the bearings of which are brought 
heavily upon th« Local, and it is oftentimes at rhese particular periods, when 
the Local is besieged by the Special of some new arrival, that the true rela- 
tions existing between him and his older company or companies, and with 
their Specials, are properly defined. Unlike the practice of a few years ago, 
when the agency of a company was sought after by the Local, strong and 
numerous arguments are now, in the main, necessary to induce any of the 
older Locals to accept any new appointment. The nature of the arguments 



12 



thus brought to bear, varies. Should the Special be long and favorably 
known to the Local, he will, perhaps, have no great difficulty in so planting 
his agency as will secure to his company its fair proportion of any and all 
new business; but more than this he cannot reasonably expect, unless in the 
event of some other than ordinary arrangement being entered into, whereby 
the volume of business may be materially enhanced. 

A FAVORITE METHOD OF ATTAINING THIS RESULT 

Is the allowance of a higher rate of compensation, either in the shape of com- 
mission, guarantee, or other inducements of a similar nature, and as with 
most men, the pocket is a vulnerable point, this method generally proves suc- 
cessful. There are, however, some few instances extant, wherein even this 
plan has proved unavailing, and where an agency once properly established 
-and maintained has withstood the blandishments of many a severe ordeal. 

Many of our oldest Locals refer with reasonable pride to their long adher- 
ence to the company with whom they first embarked, notwithstanding the 
glowing proposals as made by others, and the numerous arts and devices of 
the Special to entice them away from their allegiance. 

And here, too, is that first company entitled to an equal ratio of our respect, 
in so far as it has been through their strict adherence to business principles, 
and by courteous treatment, that this result has been attained. It is here that 
we find the truly reliable agent; one who not only looks properly after his 
renewals, and the accession of new risks, but at all times and in all cases, so 
conducts the minor details of his business as will afford little or no trouble 
to his principal, and will occasion few, if any 

REMINDERS OF REMISSNESS ON HIS PART. 

His applications forwarded promptly are correctly diagrammed and contain 
other necessary information. His account is uniformly mailed to the head 
office in due season, and it is his study to keep himself properly and fully in- 
formed as to the duties and requirements of his position, and to conform 
thereto. 

There is, on the other hand, the " happy go lucky " agent. His business 
is large; he is "hail fellow well met" with all of the Specials; will give 
them all some business, believing, by this course, that he makes a staunch 
friend of each. 

Unlike the practices of his neighbor, his affairs are loosely conducted. 
He sends the new company a considerable amount of business, but when 
-comes the time for accounts to be squared, he is often found to be "just 
a little short," and the company is requested to wait for a few days. 

The few days pass, and while the company is quite anxious to collect its 
due, it is also equally desirous to retain the agent's good will, hoping 
thereby for an increase of business. The sequel is a still longer credit and an 
unsettled account constantly increasing, and here is laid 



13 



THE BROAD FOUNDATION OF A DANGEROUS PRINCIPLE, 

One which, sooner or later, will react upon all therewith connected. To the 
Local as to the company, it is equally dangerous, for it engenders careless- 
ness and extravagance, and the end for him is disaster, if not disgrace. 

In this important particular it is in the power of the principals to shape 
the entire future course of their Local, and, at the same time place them- 
selves on a basis which will always prove firm and abiding. Defects and 
abuses will naturally creep into any competitive business, and these might 
perhaps be, to a certain extent, more successfully opposed and eventually 
overcome, were the Special, in his selection of an agent, to employ more 
time in the careful analysis of the situation, and rather than follow blindly in 
the track worked up and beaten for so long a time by the older company and 
agent, select some new man, one favorably known in the community, and 
remain with him for a few days, long enough at least to thoroughly instruct 
in what is expected of him to perform. 

As the competition increases, so also our field enlarges, and there is being 
constantly added to our lists towns in localities heretofore undeveloped. 

"There's as good fish in the sea as ever were caught," and this old adage 
proves true with us, as we are at times called upon to witness the fact that a 
newly appointed agent, properly instructed, often makes serious havoc in 
the premium list of some heretofore invincible old stand-by. 

HERE, TOO, ARISES THE QUESTION AS TO WHAT MIGHT BE 1ERMED "PROPER IN- 
STRUCTION." 

Does it not mean something more than the careful posting of the new man 
as to how to secure the largest amount of business, and as to the proper 
attention to the minor details connected therewith, required by the company? 

We believe it does, and that there are other points, to which, were Ja 
Special to devote a limited portion of his time, much would be accomplished 
towards dispersing many a hard feeling now existing in the public mind 
towards the practices of our profession. 

A fancied wrong is oftener harder to combat and overcome than a real griev- 
ance; and what Special is there amongst us that has not been called upon 
at one time or another to forcibly contradict and afterwards explain, some fan- 
cied injury done by his company? How many of our agents throughout the 
country are conversant with the printed portion of their policies to an extent 
that would admit of their giving 

PROPER ADVICE OR INSTRUCTION 

To the assured in the event of the occurrence of a loss? To partially 
quote from a portion of the report of this committee of two years ago — " How 
many times have we been asked by agents, ' Is not the value of property 
saved at a fire deducted from the face of the policy?'" And again, we often 
find that some of our oldest agents have advised the assured, in the event of 
fire, to touch nothing prior to the arrival of the adjuster. 



14 



How often we find constructions placed upon the wording of a policy wholly 
at variance with business principles, and oftentimes with common sense. 
It is a moment of embarassment, and should be of mortification, to a Special, 
when he is confronted with such ideas and remarks as oftentimes emanate 
from his agents, and moreover, it is too often the case, that, owing to his own 
dereliction of duty, in failing to properly instruct his agent, he is in conse- 
quent thereof obliged to conform in the settlement of a loss, to the ideas as 
advanced and promulgated by said agent, rather than to 

THE TKUE INTENT OP THE POLICY, 

And the circumstances connected therewith. It is at such a time as this, 
when the agent having stultified himself in the interest of the assured, plac- 
ing himself thereby in an embarassing position, is prone to dictate to the 
Special or Adjustor in the final settlement of a loss, and to inadvertantly in- 
volve the company, not only in unnecessary expense, but oftentimes in an 
exorbitant claim. At these times we are apt to blame the agent, and surely 
he is to blame, but not to any greater extent than is the Special, for had the 
latter given the necessary time to a proper instruction of the detail connected 
with these particular points of the Local's duties, these difficulties might 
have been avoided, and the company would have saved not only its money 
but its reputation. 

A THOROUGH EXPLANATION OF THE DUTIES INCUMBENT UPON HIM AT ALL TIMES, 

Is necessary to the full information of the Local, without which, business 
will invariably be but imperfectly conducted. A careless Special makes a 
careless Local, and it is only a question of time when a careless Local will 
bring his company into discredit and bad repute. 

Most naturally, on the occurrence of a fire, the assured first looks to 
the Local Agent for information and guidance in his action, and if through 
the incompetency or ignorance of the latter the former errs in his duty un- 
der the requirements of the policy, then it is the Local, and through 
him his principal, that is to blame and should bear the burden. 

Another matter to which it might be advisable to give our attention, is 
the present treatment of deviation complaints when made by agents. We 
often hear it remarked, in allusion to complaints that have been made, 
that no notice or action is taken thereon. The agent is merely informed 
that his complaint is, in some respect, defective, and that it cannot be sus. 
tained. Too often, no further explanation is given, and the matter is allowed 
to drop until, eventually, the agent concludes that it will avail him noth- 
ing by reporting further deviations; on the contrary, fears that his business 
may be seriously impaired should he so continue. 

OWING TO THE INCOMPLETE INFORMATION OFTENTIMES FURNISHED, 

It is almost impossible for action to be taken on very man} 7 complaints, yet 
were the agent to be fully informed as to the requirements of the case, much 



15 



more satisfactory results might be attained. In the event of a complaint 
being upheld, we would suggest that due notice to that effect be given, not 
only to the complainant, but to all other agents in his immediate locality, 
believing that by this action each agent would realize the fact that his inter- 
ests were being protected by his principals, and that it would tend to 
keep alive the interest in adhering to and maintaining rates, and moreover, 
would create and continue a greater faith between the agents and the assured. 
It might be urged in opposition to this suggestion, that action of this 
nature would too fully inform each agent as to the transactions of his neigh- 
bor. Perhaps it might, in so far as his system of rate-cutting and sharp 
practice be concerned, but other than in these respects we cannot see that it 
would work any hardship; on the contrary, it would do much towards 
promoting the morale of the business, and would, we think, 

MUCH MORE THAN COMPENSATE FOE ANY OUTLAY OF TIME OR MONEY. 

These suggestions, with others, seem to be of sufficient moment to call 
for our attention and sympathetic action, and in connection herewith we de- 
sire to suggest a plan that would perhaps tend, partially, if not entirely, to 
eradicate many of the evil practices prevalent in our business. 

Extend to each of our agents throughout the Coast a cordial invitation to 
meet with us at one of our quarterly meetings, then and there to bring into 
general notice and argument, any existing points of disagreement or mis- 
understanding, thereby giving all the opportunity of meeting questions of 
interest to the profession, and approving or dissolving any of the theories 
then and there presenting themselves. 

"Would this not be one step towards bringing about that harmony that must, 
to insure a successful result, exist between the Local Agent and the company? 

With the Local as with the Principal, there are constantly arising new 
phases in the conduct of his business, and while, as a rule, in the majority 
of instances, his experience can hardly be of so mature a nature as is that 
of those who have spent a lifetime in the traces; yet there are many of our 
customs of to-day in constant practice that have emanated from the brain of 

SOME THEN COMPARATIVELY NEW AND UNKNOWN AGENT. 

Who of you, in the course of your travels, have not had propounded to 
you by some new appointee, one who heretofore had neverinterested himself 
in insurance, questions that had never suggested themselves to your mind, 
and which were in a general way calculated to puzzle some of our oldest 
and wisest heads. By the adoption of this suggestion, we feel, therefore, 
that there would be filled a long felt want in our business in the establish- 
ment not only of a stronger and more lasting social basis, but also in the de- 
velopment of many new ideas, and the rooting out of many of the prevailing 
bad practices. While in the main the average Local gives to insurance but a 
very small portion of his time, being principally occupied in other pur- 
suits, the business is gradually growing and each year adds to the number 



16 



of agents devoting their whole time to the interests of their companies, 
and it is to this class that we particularly refer, being confident that the 
measure would be beneficial, in so far as it would serve to bring into more 
prominence the best interests of our profession. 

WE ARE ALL ENGAGED IN ONE COMMON CAUSE, 

In one enterprise, and it is not only the action of ourselves, but also that of 
the Locals that reflects credit or discredit upon the fraternity. Often called 
upon to settle losses for companies represented by agents other than his 
own, it is incumbent upon the Adjuster to exercise great tact and delicacy, to 
the end that he avoid such action in the premises as might prejudice both 
the Local and the company against him, which danger might in a great 
measure be avoided were all parties properly conversant with their duties 
at the time. To the Special, therefore, we would say, in your selection of 
an agent, search for, and find a man standing well in his own community, 
one gifted with strong common sense, and at least ordinary tact and ability; 
give to him the proper careful instruction, as to the principles and practices 
of the business; get him interested in the work, and keep him so, and you 
will have an agent, and a business that will reflect credit upon you, and 
prove 

MUCH MORE SATISFACTORY AND REMUNERATIVE 

In the end, than if you adopt the other easier, but less advantageous 
course. Do not subserve your judgment, and the best interests of your com- 
pany, to an inordinate desire for volume of premium, but strive in all your 
actions, to do your share towards upholding and maintaining the true dig- 
nity and morale of the profession. To the Local, we would advise, give your 
time and energy to the company honoring and trusting you with its agency; 
keep constantly in mind their best interests, and do not, at any time, allow 
their fair name to be marred by any indiscretion on your part. Acquaint 
yourself thoroughly with their business rules and principles, and be so 
conversant with the primary law and wording of your policy, as to be able at 
any time, to protect them from any imposition that might be attempted. 
Inform yourself, through the Special, of the duties incumbent on you at 
the time of a fire, and when occasion so requires, take prompt and decisive 
action, and guard well the Company's interests. 

Remember that you are at all times, and under all circumstances, the 
representative of the Company, and do not, in any event, compromise it or 
yourself by any word or act. OLIVER H. COLE. 

President — gentlemen, what will you do with the Report ? 

Mr. Dornin — I move it be accepted. 

President — If there are do objections, such will be the order. 
I do not think it will be possible perhaps, at this meeting, to 



17 

discuss the papers presented, but I think it would be advisable 
for the President succeeding me to appoint committees to espe- 
cially consider the features of the different addresses that are to 
be made here to-day, and let the reports of these committees 
follow at a special or at a regular quarterly meeting. I am 
strongly impressed with this idea, that these reports are of no 
earthly value to us unless we can sift them, and go through 
them carefully to see what they contain of value, and spread 
them out. I think when I retire, I shall make a motion of this 
kind, that different committees be appointed to discuss these 
matters at the next meeting. It is now just 12 o'clock, gentle- 
men. I think it would be desirable to adjourn and re-convene 
at one or half-past one o'clock; what is your pleasure? 

Mr. Carpenter — I move we adjourn to 1.15 p. m. 

Mr. Geo. F. Grant — I suggest that one more paper be read, 
which will not probably take more than half an hour, as when 
the mail comes in, we will all want to look at our mail before we 
assemble again. Perhaps we can spare this half hour now rather 
than on the other end of the meeting. 

Mr. Potter — I move to adjourn at half past twelve, to meet at 
2 o'clock. Duly seconded and carried. 

Mr. Dornin — In connection with the disposition of those pa- 
pers, which have been read, and are to be read, I would like to 
suggest, and put it in shape of a motion : 

That as these papers will probably be printed and embodied 
in a published report, that when they are printed, advance 
sheets be given each member of the Association, and that the 
President shall call a meeting, stating, that at this meeting, 
shall be taken up the papers in their order, and at that meeting 
the topics shall be discussed, rather than referred to committees, 
as suggested. 

Mr. G. F. Grant — I second the motion. 

President — Gentlemen, you have heard the motion, that ad- 

2 



18 



vance sheets be furnished each member of the Association 
promptly and at a Special Meeting discussion be had upon them. 
Carried. 

President — We will now hear the report from the Committee 
on Forms and Policies, Col. C. Mason Kinne, Chairman. 

Col. Kinne — Mr. President, I am glad that you made the re- 
marks you did, which have called out the motion from Mr. Dor- 
nin, which has been adopted, from the very fact that I have felt 
that it was not of any use for me to make an extended report 
on " Forms and Policies," when I have noticed repeatedly the 
treatment that former reports on the same subjects have received 
at the hands of this Association, and I allude to that in a few 
words in my^ report, and am glad that you have spoken in the 
matter, because it bears me out in the position I have taken, and 
affords a partial excuse for not furnishing you a more complete 
report than I have to-day. 

KEPOET OF COMMITTEE ON FOEMS AND POLICIES. 

To the Fire Underwriters' Association of the Pacific: 

Gentlemen — Carrying about a well filled knapsack was not considered work 
enough for me, and therefore your worthy President buckled on other duties 
in the shape of the Chairmanship of the Committee on Forms and Policies. 

This is a kind of hard tack that will furnish very dry food, so far as the 
result of the forming of policies is concerned, and while I know his inten- 
tions were good, and therefore have to find him "not guilty," I couple it 
with the injunction, not to do so again. 

I only desire to say that I believe an honest company will form an hon- 
est policy, which, of course, is always the best for everybody. 

I believe, too, that there is no one more alive to the needs of proper forms, 
than the Special and Adjuster, if he is competent to fill so important a posi- 
tion. 

THE CORRECT PHRASEOLOGY OF THE WRITTEN PORTION OF A POLICY 

Is important to protect the interests of both the assured and the company, 
and the adjuster is the first who is called upon to pass on the contract. As 
Special he is called on to explain the why of this or that wording, and the 
more explicit the contract, without unnecessary verbiage, the easier the equi- 
ties of the same can be explained. 



19 



It is. impossible for a single company to work out any necessary reform 
in the matter. While agitation is the only means of reform, united action 
is necessary to accomplish a result, and this I am very much afraid we 
can never get. 

The very full and carefully framed reports of previous committees on this 
same subject, comprising printed conditions such as would meet the later 
decisions of cranky courts and crankier juries, have been read, listened to, 
and— filed away. The only good to be had from the report of a committee is 
to utilize the good there may be in it, by some united action. I believe, 
however, that if the correct forming of the written portion was more carefully 
looked into, there could not be so much misunderstanding between the as- 
sured and the company. 

A CONTRACT 

Should be worded so as to express exactly what is to be insured, and then 
let the adjuster first, and the company afterward, stand by the contract. 
There are too many of what might be called fraudulent forms, and an adjust- 
ment, be it never so liberal, is not satisfactory to the assured. 

If you have an honest loss and an honest claimant, you must pay the loss, 
and so pay it like a man. Don't cinch your client on technicalities. If a 
country druggist insures his stock, he desires co have all he sells for profit 
covered by the policy. To insure " drugs and other similar merchandise," 
will not do. Cigars, stationery, etc, are kept by nearly all country druggists, 
yet you can hardly call them similar merchandise. " Such other merchan- 
dise as is usually kept in a country drug store," would seem to fill the bill for 
the shrewd claimant, but there 

A DIFFERENCE OF OPINION 

Between the adjuster and himself at once occurs. " Not more hazardous" 
with the various classes of hazards always printed in the policy, is readily 
understood, and no mistake need be made. 

As to printed conditions, I would suggest that there are three words that 
ought to be added to them to meet a recent decision, and which has been 
done by one or two companies who are alive to such necessities. It is in re- 
lation to a transfer of property insured, to some other locality, and while it 
can do no harm, it will put an estoppel on any more tom-fool decisions. 

In the phrase, "if any change in title," etc., cause it to read, "if any 
change in location, or in title," etc. 

But enough; I will add what another of the members of your committee 
has to say, and give you that, and nothing more. 

C. MASON KINNE. 

MR. FLINT'S CONTRIBUTION. 

Your Committee on Forms of Policies, (this portion of it), beg to say, 
that they have nothing to add to what has already been read before this 



20 



Association, and know of no decisions of recent date touching the printed forms 
now in use; and the same may be said of the written portions of the policy, 
with this addition, they are going from bad to worse, as the companies have 
handed that part of the contract over to the assured or his broker to attend 
to for them. Eespectfully submitted, Flint. 

President — Gentlemen, what will you do with the report ? 

Mr. Hunt — I move it take the usual course. 
So ordered. 

President — Next in order is the report from the Committee on 
Losses and Adjustment. Mr. Garniss, of committee, read the 
report. 

LOSSES AND ADJUSTMENT. 

To the Fire Underwriters' Association of thePacific : 

Gentlemen — In considering the subject of losses under Fire Insurance 
policies and their subsequent adjustment, your Committee have been fairly 
at a loss how to concisely and intelligently report upon same without repeat- 
ing, if not in precise language, at least in thought, much of what has hereto- 
fore been so forcibly and logically presented by gentlemen of learning and 
ability, composing former committees of this Association, so that any effort 
on the part of this committee might be as " an attempt to paint the lily or 
perfume the rose." 

The subject, however, is one of increasing interest and vast extent, and 
must necessarily have been coincident with the inceptive and crude workings- 
of the science of underwriting, as is said to have been first practiced by 
the ancient Rhodians, about a thousand years before the Christian era, and 
who, to use the pertinently expressed motto of the N. Y. State Insurance De- 
partment, "bore each others' burdens," in a mutuality of hazard, on the cost- 
ly and precious shipments of 

THEIR WELL LADEN ABGOSIES. 

Losses undoubtedly did occur on these ventures, but in what manner 
apportioned, or adjusted — if at all — is a matter of mere conjecture. 

When the renowned Esculapius enunciated the inceptive science of med~ 
icine, one of his zealous students inquired of him — what mankind did in 
suffering and sickness before the art and practice of materia medica was known 
— whereupon Esculapius tersely replied, "they died! 11 and so alike, and be- 
fore the advent of practical underwriting, the losses suffered by mankind, 
either by shipwreck on sea, or fire on land, for lack of some sustaining in- 
demnity, must have died also. 



21 



But whether or no, the idea and practice of indemnification by insurance 
against loss, did in fact have its inception before the Christian era, it seems 
highly probable, that a contract of such easy invention, and of such utility, 
would almost be a necessity to the existence of an extended commerce, and 
■could not have been wholly unknown; and this probability is strengthened 
by the fact, that in modern times the introduction of 

INSURANCE WAS ALMOST COEVAL WITH THE REVIVAL OF COMMERCE, 

And this, too, in an age when the cloud of ignorance had scarcely begun to 
be dispelled, and the beams of knowledge and civilization were yet struggling 
in the mist of a doubtful twilight* 

It has been asserted, but based upon no definite data, that the idea and 
practice of Marine underwriting obtained among the Romans, also at the 
ancient cities of Tyre, Sidon, Carthage, Corinth, Athens and Alexandria. 

But, as a matter of record, however, we do know that theirs* allusion to 
insurance anywhere to be found, was in the written laws of the merchants 
and masters of " the magnificent City of Wisby," a port on the Baltic, and 
which, up to the fourteenth century, had attained considerable distinction 
and prosperity. And from such scintillations of light, and feeble glimmer- 
ings from out the shadowy past, we discern the germ, at least, of what sub- 
sequently took form as a science, when, in the thirteenth century, certain 
Italians from Lombardy introduced into England, and to our Anglo-Saxon 
race, 

THE PRACTICAL IDEA OF MARINE UNDERWRITING AS A SCIENCE, 

And it was not until the year 1696, and about thirty years subsequent to 
the great fire in the city of London, that fire insurance, and as it has been 
aptly expressed, "the legitimate though tardy offspring of 'marine insurance* — 
11 came slowly and lingeringly into repute, as an efficient co-adjutor of 
u the property holder, in securing indemnity for loss or damage by the 
" ravages of fire" — and took form and shape in the organization, at the 
1 City of London', of the first fire insurance company of which we have record, 
■entitled, "The Amicable Contributionship," but which name was subse- 
quently, and in 1698, changed to "The Hand in Hand," and by which title 
the grim old " Ancient of days" is still known, down to our own day and 
generation. 

It was not until the year 1752, when, at the city of Philadelphia, the first 
American fire insurance company was organized, and named, " The Philadel- 
phia Contributionship for the Insurance of Houses from Loss by Fire," 
certainly a title long enough to entitle it to consideration — and the policies 
issued by this pioneer company, were quite as peculiar and eccentric as its 
multiple and inharmonic name. This being 

THE FIRST FIRE INSURANCE POLICY EVER ISSUED IN AMERICA, 

Perhaps it would not be uninteresting to give a concise synopsis of its terms. 
1st. The policy was written for the term of seven years. 



22 



2d. The premium was neither a rate payable annually, nor for the entire 
term of seven years, but was the deposit of a sum, the use or interest of 
which, during the term of the policy, belonged to the company. 

3d. The risk of all fires was assumed, without any exception of public 
enemies, military or usurped power, rebellion, civil commotion, or riot. 

4th. The property insured was protected during the term, against any 
number of losses not total, without reducing the amount insured on the premi- 
ses, or impairing the deposit. In case of destruction from the first floor up- 
wards, at anytime, the Company had an option, to pay the whole insurance, 
and so end the policy, or to rebuild, the policy continuing in force, and how 
often soever, the destruction by fire, and the rebuilding might take place dur- 
ing the term, the policy continued in force, and the deposit unimpaired. 

5th. The payment of the deposit, the acceptance of the policy, and the 
signature of the deed of settlement, made the assured a member of the com- 
pany, and a party to all the articles of the deed. 

6th. The personal liability of the members for losses, beyond their own 
deposit, was half as much more, in case a single fire, beginning in one house, 
and damaging one or more houses, should sweep away all the funds of the 
company. 

7th. The concern was managed for the profit and loss of its members, 
interest being allowed to them on their deposits, in proportion to the whole 
amount received by the company, and a portion of the losses and expenses 
charged to them, and the balance settled at the expiration of the policy. 

8th. Executors, administrators and assigns were included as members, 
there being a provision for notice of transfer, and transfer and assignment 
within a limited time, and the approbation of the directors. 

THESE QUAINT CONDITIONS 

Are certainly in marked contrast to our own modern Fire Insurance policy, 
with its long list of stringent exceptions, the " provided always," the " never- 
theless," and the "mutually understood" head line in prominent or itali- 
cized type, and which affright the perplexed non-professional with a seem- 
ingly perfect maze of inexplicable uncertainties, as he attempts to fathom its 
latent mysteries; and it would be quite amusing to witness the manipulation 
of a fire loss under one of these quaint old policies, in the hands of one of our 
modern astute adjusters, as he persistently wriggles and wrestles with its coun- 
ter conflicting interests and liabilities, in a triangular duel, as between him- 
self, the company and the assured. 

Besides the eccentrically conditioned policy, this pioneer Fire Insurance 
company had many peculiarities; among others, the setting up of milestones 
on roads leading into Philadelphia, the result of fines imposed on absentees 
from company's meetings; but whether this business idiosyncrasy could be 
construed as placing this primitive institution as the pioneer ?ni//-ionaire 
company, your committee modestly declines to express. 



ANOTHER PECULIARITY 

Was the refusal to insure bouses with shade trees around them, incited by a 
loss which was occasioned by a burning shade tree, and the dissatisfaction of 
the patrons of the company consequent on this refusal, led, in 1784, to the in- 
corporation of the second fire insurance company, entitled "The Mutual Assur- 
ance Company for the insurance of "houses from loss by fire;" and as the 
first American company, in imitation of its prototype, the old Hand in Hand 
company of London, placed its badge of two united hands on the front of its 
insured risks, expressive of its friendly mutuality, so, as a symbol of the 
occasion of its origin, this second fire insurance company chose the green tree 
as its badge, and thereafter the umbrageous adornment became no longer a 
thing of reproach. 

Commencing /with these two incorporated pioneer fire insurance companies 
in America, there has come down to us the record of hundreds of incorporated 
insurance companies, some like the old Hartford, starting in 1793, and pur- 
suing 

AN HONORABLE AND UNIMPEDED COURSE OF PROSPERITY, 

Claims now its representative among us for competitive business, with its 
prop of Flint, and foundation as enduring as adamant; and later on, and in 
our own century (1819), the old iEtna, also of Hartford, comes down to us 
with an equally enviable record, represented by no non-Boardman, and at 
present claims the care and protection of a Pope, whose immunity from error 
in this connection might, with equal justice, be as infallible as that of the 
Roman Pontiff himself — and then, as an instance of enormous growth and 
unprecedented prosperity, the Mutual Life insurance company of New York, 
with policies written to the extent of $315,000,000, and assets of $95,000,000— 
a Colossus of Rhodes, (if indeed, as heretofore intimated, the Rhodians did 
first give to the world the inceptive idea of insurance) — the largest incorpora- 
ted insurance company known, unless it maybe equalled (if not excelled), 
by the Sun Fire office of London, the exact financial status of which has ever 
remained a "widdle which no fellow can find out;" while other companies, 
starting out with every prospect of success and permanency, have "fallen by 
the way," weary and overburdened; still, 

THERE ARE ENOUGH LEFT, 

In all conscience, and not only in numbers, but in variety ; for, besides the 
inceptive idea of Marine and Fire insurance companies, we are " hedged 
around " with incorporated companies which indemnify against loss by death, 
accident, dishonesty, to live stock, by hail, burial expenses, and even matrimonial 
outfits — the latter two both decidedly grave in character, but to the immediate 
causists, which the most acceptable "horn of the dilemma," your Committee 
would leave to the practical experience of this associated membership. 

But, keeping even pace with the advancement of these stately fire insurance 
corporations, we find the classification of hazards becoming one of the chief, 



24 



if not actually the chief factor, in the underwriter's profession. The status of 
hazard has met with 

MABKED AND EADICAL CHANGES 

Since the early settlement of our country, and the incorporation of the first 
fire insurance company at Philadelphia, when the buildings, generally, stood 
detached, and the unfortunate sufferers by fire were accustomed to look to 
friends and neighbors, rather than to an insurance company for protection — 
when appliances for the extinguishment of fire were confined to buckets of 
water passed by neighborly hands, from private wells to the scene of the 
fire, only to be subsequently improved and superseded by the rudely con- 
structed and inefficient hand engines without hose, until, year by year, the 
hazards increased, by more compact towns and cities, supplemented by the 
extra hazard of artificial light — first, from the home made "dip" candle to 
whale oil — then to lard oil, along with the lucifer match — from that to cam- 
phene and burning fluid — afterwards to coal oil — later to coal gas, and last 
of all ("like Satan") comes the electric light, and with which the fire under- 
writers of the world are now 

WBESTLING, AND BEACHING OUT SP 1SMODICALLY 

For some adequate means of protection against an insidious foe, as hidden 
from view, as sudden in action, and as efficacious in destructiveness, as was 
the dreaded thunderbolt of old Jove himself. 

But while these improved artificial lights have been steadily increasing the 
hazard of fire, they have been supplemented by many hazardous mechanical 
contrivances, and powerful explosives, so that, in spite of the steadily im- 
proved construction of fire proof cities and towns, the acknowledged efficiency 
of steam fire-engines, manipulated by well organized paid departments, the 
improved strength of fire hose, and the great abundance and force of water 
supply, the fires in these latter days seem to be growing more destructive 
and devastating in character, and entire cities of solid masonry are being 
swept away like chaff before the wind. 

IT IS A STATISTICAL FACT, 

That, while the total property valuation of the United States is below that of 
France or Great Britain, the annual accumulation of wealth in this country 
is greater than that of any other modern nation. In Germany it is $200,- 
000,000; in Great Britain it is $325,000,000; in France it is $375,000,000; but 
in the United States it reaches the enormous amount of $825,000,000— that is 
at the rate of $2,300,000 per day, and its towns and great cities are increasing 
proportionately. As a proof of which we find that there were erected in 1881, 
in the cities of New York and Brooklyn, 4,421 buildings, costing approxi- 
mately $57,500,000. 



25 



Necessarily the business of the companies will keep pace with these newly- 
created risks, and the consequent losses to the Fire Underwriters will grow 
in volume, year by year, with this almost 

FABULOUS ANNUAL GROWTH OF WEALTH AND IMPEOVEMENTS. 

It behooves us, then, to exercise great diligence and circumspection in the 
selection of risks, and the consequent avoidance of loss; but a tire loss, when 
made, should receive equally as careful a consideration at the hands of skilled 
adjusters, as is customary with marine losses, the result being equally import- 
ant in both cases; and your Committee regret to note the generally loose and 
unsatisfactory way of adjustment of fire losses on the Pacific Coast, and 
which, in many instances, have been the occasion of complaint, both from 
Foreign and Eastern offices, and which unskilled .manipulation serve as a 
premium and incentive to the vicious, not only to originate a fire, but, when 
accidentally occurring, to fraudulently mistate or over-estimate the loss; and 
in making this comment and suggestion, your Committee would by no means 
be understood to recommend a sheer technical resort to a strict construction 
of the conditions of a policy, unsupported by any adverse collateral circum- 
stance in connection with a loss; such a resort, ordinarily, if persisted in, 

WOULD END DISASTROUSLY 

To any fire insurance company, as was eminently instanced at the city of 
Boston, many years ago, when the companies then doing business at that 
point were proverbial for promptly settling their losses and avoiding, if possi- 
ble, all technicalities, as conditioned by their policies, even when they some- 
times felt assured the same were strongly in their favor — all but one fire com- 
pany, known as the Oriental Company, and which started under the most fa- 
vorable auspices, both as to means and personal influence. This company 
invariably insisted upon all advantages from a technical standpoint. The 
consequence was, that the company was continually embroiled in lawsuits, 
and the calendar of the Court of Common Pleas, throughout each term, was 
burdened with suits brought against it, so that it soon became a daily occur- 
rence for the Clerk of the Court, (who in those days called the calendar), to 
call out, in solemn and stentorian tones, "John Smith against the Oriental 
Ins. Co.," or " Thomas Jones & Co. against the Oriental Ins. Co.," so that 
this company, in three years from its inception, was forced into liquidation, 

A VICTIM TO ITS SELF-CREATED RUIN, 

And from which fortuitous result, the moral — "pay promptly and avoid pos- 
sible technicalities," will be naturally drawn, and your Committee hopes well 
remembered. 

But, without further digression from the main idea under consideration, 
your Committee would earnestly recommend that more care and attention be 
bestowed on the written portion of policies, for great difficulties are constantly 



26 



experienced in ascertaining what vaguely worded policies actually do insure, 
and further, that the adjustment of all losses be conducted in a thorough and 
scientific manner, the subject insured, and upon which claim is made, being 
reduced to an actual cash valuation at the date of the fire, to the end that some 
satisfactory solution of the mystic problem might be attained, by the con- 
struction of some equitable rule, by means of which, an 

UNDISPUTED APPORTIONMENT OF NON-CONCURRENT POLICIES 

Could be made. But, your Committee fear, that such halcyon days of fire 
underwriting propriety, may never dawn upon us from out the gloom and 
tangle of the hurry and worry, the jealousies, the bickerings and back-bitings 
incident to, and that overshadow all underwriting pursuits; but in order to 
meet the difficulty somewhat, your Committee believe that the settlement of 
loss under non-current policies, could be so localized as to meet the approba- 
tion of all the fire companies doing business on the Pacific coast, and to such 
end, beg to respectfully recommend: 

That a committee of three, or more, members of this Association, be select- 
ed, whose duty it shall be to construct and report back to this Association, a 
rule for the settlement of loss under non-concurrent fire policies, and which 
rule shall be of as equitable a character as practicable, and to meet, as near 
as may be, the various questions and conflicting rights 

SO OFTEN UNSUCCESSFULLY WRESTLED WITH, 

That upon the adoption by this Association of such a rule, and the assent 
thereto of all other fire insurance companies, not connected with this Asso- 
ciation, all fire policies thereafter issued on this coast, have conspicuously 
printed or stamped thereon, this "Pacific Rule 11 (for such in character it 
should be, as well as in name), coupling same with a short agreement, to be 
signed, both by the underwriter and the assured, in words to the following 
effect : 

"In the event of othtr, and non-concurrent insurance with this policy, the 
loss as to such non-concurrent insurance shall be apportioned and settled 
upon the following rule of adjustment " 

And it is earnestly hoped by your Committee that some early action may 
be had by this Association, in connection with this all important subject of 
non-concurrent insurance; that harmony and good- will may ever prevail 
among us, and that justice and equity and charity to all, be ever the attend- 
ant hand-maidens while in the pursuit of our ancient and honorable calling. 

Z. P. CLAftK. 
JAMES. K. GARNISS. 

President — Gentlemen, if there are no objections, the report 
will take the usual course. 



27 

The hour has now arrived when we should adjourn, I will 
simply say, that I hope the audience will be prompt and the 
members in their seats promptly at 2 o'clock. If there are no 
objections the Association will stand adjourned until 2 o'clock 
this p. m.. Adjourned. 



AFTEENOON SESSION. 

Pursuant to adjournment, the Association was called to order 
at 2 o'clock P. M. President Bromwell in the Chair. 

President — Gentlemen, it is but proper that I should intro- 
duce to you, Mr. Will L. Eason, associate editor of the Coast 
Review; Mr. Galen M. Fisher, of the Oakland Home Insurance 
Co., and Mr. F. A. Sackett, our short-hand reporter. 

I call on Mr. A. D. Smith, Chairman of the Committee on 
" Legislation and Taxation," for his report. 

Mr. Smith then read the 

REPORT OF THE COMMITTEE ON LEGISLATION AND 

TAXATION. 

To the Fire Underwriters' Association of the Pacific: 

Gentlemen — With the premise, (in which we have no doubt you will all 
agree with us,) that, of legislation, as it goes, the less we have of it the better, 
your committee congratulate you upon the fact that this is an "off" year 
with our legislature. We have nothing further to fear, as regards changes in 
our State laws, for another twelve months. 

We have a respite from the interested visits of committees from the "third 
house,' ' who, in their anxiety to advocate measures favorable to our interests, 
or to defeat those which may be adverse, are willing to give— for a trifling 
consideration, of course — their valuable time and influence. 

We are not, as members of sub-committees, compelled to seize our travel- 
ing bags and run for the Sacramento boat, because our colleague at the front 
telegraphs us that the member from Milpitas is weak and wavering, and needs 
our peculiar method of manipulation to bolster him up. 



28 



NO MOBE MEETINGS. 

We are not called upon to attend meetings of the Eastern companies, in the 
morning, to advise as to the best course to be pursued to nullify the action 
taken at a convention of the Local and Foreign companies the night before, 
proposing measures inimical to our interests; nor at meetings, at noon, of 
the Local companies, to discuss ways and means to meet threatened incursions 
upon their rights from a combination of the Eastern and Foreign companies; 
nor at night, to confer with the Foreign companies, and to gird on our armor 
to meet the attacks of the confederated Local and Eastern companies. 

No longer does the lordly President of the Fireman's Fund meet with all 
these councils and by his beaming countenance and genial ways smooth over 
many of the conflicting points and pour oil upon the troubled waters. 

To-day we do not find that our allies of the morning have entered into a 
league, offensive and defensive, against us at night. That drove of night- 
mares, deposit-laws, taxation, valued policy bills, etc., etc., no longer deprive 
us of " tired nature's sweet restorer," and we lie down to pleasant dreams. 
The ludicrous but trying situations in this comedy of errors, arising from 
our supposed diverse interests, no longer amuse or annoy us. We can meet 

THE COLOSSAL CHIEF OF THE "OLD CALIFOENIA," 

With equanimity. No longer are we restrained by that wise, and in this 
instance, extremely healthy admonition, handed down to us from the past, to 
""take a fellow of our size," and compelled to repress an earnest inclination 
to give him a furtive thrust, as our common enemy, the cause of all our 
troubles, the instigator of all our woes, as the one who started the ball rolling 
that threatened to crush us all . 

No! these wrongs, or fancied wrongs, are now things of the past, and 
liappily we need fear no trouble from that source again. The claws of this 
California Bear, have been clipped, and he lies down with the Maori from 
New Zealand and beams upon the American Eagle and the British Lion, 
in, we trust, everlasting bliss. 

And while taking this retrospect, we are reminded of others who have 
■changed their front. The omniscient and omnipresent, ever-working Dornin, 
and the learned and dignified Haven, have left the ranks of the Locals and 
.gone over to the foreigners. In this transfer the Local interests will find 
that they have lost, and the Foreign element gained, pillars of strength. 

AND WHO CAN TELL 

But that the cool and conciliatory Boardman, who has " sailed the seas over" 
and "crossed the wide ocean," and "gone abroad, strange countries for to 
see," may be weaned from the old iEtna, and, return to us a "blarsted 
Britisher," with hair parted at the meridian, blonde side whiskers, and some 
of the aesthetic love of the lily and the sun-flower possessed by our royal 
friend Jones. 



29 



But we must not forget, that while the tempest is, for the moment, lulled 
in our own little tea-pot, there are other tea-pots and other tempests. Already, 
as we learn from the Eastern Insurance journals, the toc3in of war has 
sounded, the common enemy has opened its heavy batteries. The New York 
Legislature is flooded with bills, more or less antagonistic to our general in- 
terests. Now, what can we do to prevent this annual or biennial disrup- 
tion in our ranks; this continuous wrangling among ourselves— this con- 
stant irritating condition of dread of attack? Are our several interests so 
diverse? Are they not identical ? Has not 

A SPIRIT OF SELFISHNESS 

Caused us to forget the golden rule, and to seek the advancement of our own 
personal interests while disregarding those of our neighbors? 

In this lack of unity, engendered in selfishness, lies our weakness. Our 
enemies, knowing this, toss into our ranks the apple of discord, and look 
smilingly on whilst we tear each other to pieces, and then come in and seize 
and divide the spoils among themselves. Ought we not, therefore, to lay 
aside our personal interests and prejudices, and unite firmly to repel the 
ttacks of unfriendly legislators and lobbyists. As in the great struggle for 
life, some of our number will have to suffer for the general good, and the uni- 
versal law of the survival of the fittest will be maintained. 

While thus having dealt in generalities, your committee have a few practical 
suggestions to offer. To aid us in laying this spirit of selfishness, we must 
secure 

SUCH LEGISLATION AS WILL PLACE US ON A COMMON BASIS. 

If the local companies are subjected to taxes that are not imposed upon 
Eastern or Foreign companies, so modify our laws that the burden may be the 
same on all. 

It has been charged that Foreign companies, doing business in this 
country, sustaining heavy losses, by reason of some great conflagration, might 
" fold their tents like the Arabs and steal silently away," leaving the Ameri- 
can policy-holders without redress; and our American companies have used 
this as an argument why the policy of an American company, whose assets 
are within the reach of our courts, should be preferred over that of a Foreign 
company. If our home companies possess an advantage over the Foreign 
companies, in this respect, 

LET THE LAW EQUALIZE THE MATTER, 

By providing that such Foreign company may deposit, in this, or some other 
State of our Union, for the security of its American policy holders, such sum, 
proportioned to its liabilities here, as will place it upon an equal footing with 
our own companies. 

We understand that many of the Foreign companies now among us have 
already made such deposit in this country, and we believe such a provision 
would meet with disfavor from no one. but would be approved by all. 



30 



American companies being taxed upon their assets in the several States 
to which they belong, it would seem only just that such deposit, as well as 
other assets in this country of aliens, should be subjected to taxation in 
the same manner and ratio as the property of citizens. The State or States 
where such deposits are made would be the principal gainer, but all would 
derive benefits indirectly. 

It also seems but just that each and every company from abroad, whether 
from other States or from foreign countries, should alike bear the expense of 
the community government, by taxation proportioned to the business trans- 
acted by it in our State. 

A MODEEATE, UNIFORM TAX 

Upon the net premium receipts would accomplish this, and if every State 
should enact an income tax, every company would pay its just proportion of 
the several State government expenses and no more. 

Let us have no more*' stamp acts,'* no more "retaliatory" laws; nor, 
what virtually amounts to the same thing, " reciprocal " laws; but let us, in a 
spirit of fairness, define our position; demanding only what is just, and what 
we would expect others to demand from us. The enactment of such laws 
could be effected, we think, without difficulty, provided we lay aside our per- 
sonal interests and unitedly petition for the same. No Legislature would 
dare to refuse its sanction to such measures, conceived, as they would be, 
in justice, and with that powerful lever — public opinion — which is always 
founded on right, behind us. 

Let us, therefore, use our united influence to secure a correction of the 
wrongs and abuses to which we have been subjected in the past by the enact- 
ment of such laws as have been indicated, and having thus the burden 
lifted from our own shoulders, still use that united influence to aid others, 
and 

SECUBE SIMILAR ACTION IN OTHER STATES. 

One State, and let it be ours, having taken the lead in this matter, others, 
by mere force of example, would soon follow. And when all the States have 
such uniform laws upon their statute books, then the millennium will be at 
hand, and we can dwell together like brethren in unity. 

Respectfully submitted, A. D. SMITH. 

The report was ordered to take the usual course. 

President — Gentlemen, I have to announce concerning the 
Committee on Fire Department and Water Supply, that two 
members have been absent in Oregon, and one of them has been 
there for the past year; so, with your permission, we will pass 
that and take up the Committee on Statistics. I will say that 
Mr. Brown, Chairman of that committee, is very much indis- 



31 

posed and confined to his house. By that illness we are doubt- 
less deprived of a very valuable paper. Mr. Brown, I believe, 
has never heretofore failed in his duty. 

I now call upon Mr. Staples for his Library reporjb. 

Mr. Staples— Mr. President and gentlemen: I will premise 
this report by simply stating that the Secretary has had quite a 
number of duties to perform in his official capacity. The other 
members of the committee have been able to render no assist- 
ance, Mr. Callingham having been absent in Oregon for some 
time, and Mr. Naunton occupied with the duties incident to a 
change of agency. The consequence has been that neither of 
us have been in such a position that we could give the matter 
the attention we should have done. 

KEPORT OF COMMITTEE ON LIBRARY. 

Mr. President and Members of the Fire Underwriters* Association of the Pacific: 
Gentlemen — Your Committee have not had many opportunities of meeting 
for purposes of consultation or work, and yet in the year just past the Library 
has grown. 

There has been added the following works during the year, to-wit: One vol- 
ume Woods on Insurance; one volume Coast Review; one volume Insurance 
Times; one volume Monitor; one volume Law Journal; one volume Spectator; 
besides which we have received several pamphlets. 

At the last Annual Meeting the Secretary was directed to purchase a new 
Library case. This has been done and the fine black walnut case which now 
contains our collection of insurance works is before you, and will show how 
well the money has been invested. 

OUE LIBRARY 

Now consists of the following works, viz.: Twelve volumes Coast Iteview; 
two vols. Codes and Statutes of California (Theo. H, Hittell), Vol. 1, Con- 
stitution, Political and Civil Code, Vol. 2, Civil Procedure, Penal Code and 
Statutes; one vol. Commentaries on Agency and Agents (Wharton); one vol. 
Digest of Fire Insurance Decisions (Littleton & Blatchley, 3d edition, Clement 
Bates); one vol. Digest of the Law of Fire Insurance (Oliver B. Sansom); 
one vol. Fires, their Causes, Prevention and Extinction, combining also a 
Guide to Agents (F. C. Moore); one vol. Current Forms of Policy (Bever- 
edge); four vols. Fire Insurance Cases (Edmund H. Bennett), from 1729 to 
1839, from 1840 to 1848, from 1849 to 1854, from 1855 to 1864; one vol. Fire 
Underwriters' Text Book (J. Griswold); one vol. Flanders on Fire Insurance; 
five vols. Insurance Times; ten vols. Insurance Law Journal; fifteen vols. In- 
surance Monitor; one vol. May on Insurance, Fire, Life, Accident, Guarantee, 



32 

<fcc; two vols. Municipal Reports, 1874-5, 1875-6; three vols. Proceedings of 
the Fire Underwriters' Association of the Northwest, 1875-6, 1878-9, 1880; 
fourteen vols. Spectator; seven vols. U. S. Gazette; one vol. Waiver and Estop- 
pel (Beveredge) ; one vol. Woods on Insurance. 

In addition to the foregoing we have several valuable pamphlets, and quite 
a number of copies of the published proceedings of this Association. 

We have now on hand two book cases, and would suggest that the old one 
be sold. 

Your Committee has thought best to insure the property of the Association 
to the amount of $300, in the California Insurance Company, and the Secre- 
tary now holds the policy. The Committee during the year intended to solicit 

PERSONAL SUBSCRIPTIONS TO THE " LIBRARY FUND, 

And would have done so, but for the series of events which transpired to 
prevent such course, the death of our late lamented Garfield, and the imme- 
diate solicitation of funds to aid in the purchase of a monument. This being 
followed by the Veterans' Home Association appeal. So general were the 
canvassers, and so thoroughly did they do their work, that we were not 
willing to risk absolute refusal to our appeal had we made one. 

We think, however, that the current year bids fair to be a prosperous one, 
we hope for the insurance companies as well as the world at large, and in 
that event, it might be well for the new Library Committee to take this 
matter in hand, and by a systematic and persistent appeal, we think they 
will be able to raise a fund large enough to enable the Committee to purchase 
such works of standard law as should be upon our shelves, among which are: 
"The Law of Contracts;" "The Law of Evidence;" "The Law Governing 
Corporations," and many kindred works. 

We also recommend that the Library and case be removed to the office of 
some member of the Association having a central office and easily accessible* 
he to be appointed Librarian, his duties to be defined by the Association, and 
the Library placed under his charge. Such restrictions as to time of keeping 
books from the Library may be adopted as deemed proper. The present rule 
is, that no book be removed and kept out to exceed one week. 

In connection with the future purchases for our Library, we desire to call 
attention to the generous offer made by Mr. J. G. Edwards, an honorary mem 
ber of this Association, at the annual meeting in 1880, that he would pur- 
chase at the lowest rate, any books that were wanted by the Association for 
this Library, and would donate his commissions. We commend this mu- 
nificent offer to our successors. 

Tour Committee regret that their time has been so fully occupied that no 
elaborate report on Library could be made, or suggestions as to particular 
works which they would recommend for purchase. 



33 

AVith best wishes for the future of the Association, and the Library in par- 
ticular, we, your Committee, beg to subscribe themselves. 

J. W. STAPLES, 

W. J. CALLINGHAM, 

R. H. NAUNTON, 

Committee. 

President — If there are no objections, the report of the com- 
mittee will be accepted and take the usual course. 

Before calling for the " Knapsack/' I will say: Upon assum- 
ing the presidency of this Association, I caused to be issued an 
invitation to several gentlemen, not on the regular committees, 
to address the Association at this meeting. That call has not 
met with the response I had expected, though I see before me 
Mr. Carpenter and Mr. Gunnison, and some others, who, I pre- 
sume, are prepared to give us the benefit of their researches. 

I have a letter to read from Mr. Dornin, (reading). 

San Feancisco, Feb. 21, 1882. 

L. L. Bromwell, Esq., President: Dear Sir — I crave your indulgence, and 
that of the Association, because of the non-completion of the paper, " Com- 
pletion and Validity of the Preliminary Contract," which you requested me 
to prepare. 

With the best intentions in the world to meet your request, the matter has 
been crowded aside by the pressure of other and unexpected duties. If you 
will permit me, I will endeavor to prepare it in season to be embraced in the 
report of the proceedings — anticipating your reference to the proverb, that a 
certain place (called Hades, in the new version), is paved all over with good 
intentions. Yours, very truly, GEO. D. DOKNIN. 

President — I take the liberty now of calling on Mr. Carpenter 
for a paper on the " Hazard of the Electric Light." 

Mr. Carpenter — Mr. President and gentlemen: When this 
subject was mentioned about a year ago, I had some hopes of 
being able to furnish you with something new and interesting, 
but since that time the subject has been so fully discussed by 
other associations and by the press, that it is more as a matter of 
duty, than with any idea of giving you anything interesting, 
that I present my paper on the " Fire Hazard of the Electric 
Light." 
3 



34 



Mr. Eoe, of the Brush Electric Light Company, was here 
introduced by the President. 

REPORT OF MR. CARPENTER ON FIRE HAZARD OF 
THE ELECTRIC LIGHT. 

Every new manufacturing process, every new method of heating, every 
new system of lighting, brings with it its peculiar hazard for the underwriter. 
To such hazard we should give our early attention, and in proportion as the 
new idea possesses the elements of popularity and successful adaptation, it 
should receive a greater share of our careful consideration. 

We should accord it this scrutiny, not alone for the purpose of guarding 
ourselves against its dangers, but to the end, that we may make such practical 
suggestions as will enable its promoters and users to so modify the construc- 
tion as to reduce the hazard to the minimum. 

The importance of an early consideration of such new ideas becomes the 
more apparent, when we reflect that it is much easier to direct inventive 
thought into the proper channel at the outset, than to tear down and re-erect 
expensive apparatus, which has, in the first instance, been wrongly con- 
structed. 

Our underwriters have been none too early in turning their attention to 
the fire hazard of the electric light. There are already some five hundred of 
these lights in use on the Pacific coast, one-third of them in this city, Lnd 
their number will rapidly increase in a community so quick to adopt a nov- 
elty, and so ready to utilize a new method of advertising. 

We are not to consider the question as to whether the electric light is more 
safe than gas, coal oil or candles, but we are to seek out its subtle dangers, 
whether they be great or small, and suggest such practicable modifications as 
will, at the outset, to the greatest possible extent, 

ELIMINATE THE FIRE HAZARD. 

If the only danger of the new illuminant were in the lamp itself, our task 
would be a simple one, for people are accustomed to guard against the fire 
hazard at the point where they see the flame. But it is from the insidious 
character of the danger which permeates every portion of the innocent look- 
ing, cord-like conductors, that we have most to fear. 

The electric light menaces the underwriter not only as an incendiary, but 
as a hindrance to the extinguishment of fires. 

Considered as a fire kindler, the lamp is, in the case of arc lights, like 
those now in use in San Francisco, the most obvious source of danger. The 
carbon candle is coated with a thin film of copper, by means of which the 
electricity is conducted to the point of the candle, where the light is pro- 
duced. As the candles wear away, the dropping off of small globules of 
melted copper, and the throwing off of little particles of burning carbon, 
present 



35 



A MANIFEST DANGER 

That has been practically exemplified in the burning of the Randolph Mill in 
Philadelphia, where so many lives were lost. The Boston Manufacturers 
Mutual Insurance Co. report three fires from this cause in mills insured by 
them, and the Palace of Industry at the Paris Exhibition caught fire three 
times from such sparks. There is especial danger from this source when 
there is any imperfection in the carbon or irregularity in the driving of the 
engine, as the liability to snapping and sparking is then increased. Again, 
where the carbons are not perfect, there may be hard substances in them 
which will fall off, and are like hot coals. There is also some danger from 
ascending sparks. 

The lamp presents other hazards not so easily understood. Recently, in 
Philadelphia, a flame two feet in size, shot from a large glass globe at the 
corner of Fourth and Chestnut streets. A peculiar flickering had been pre- 
viously observed, but the cause of the phenomenon has not been stated. At 
the Lafayette Theatre in Paris, a lamp set fire the surrounding wood work, 
and it has even been suggested that there was possible danger from the rays 
of an electric light, if powerfully concentrated upon inflammable material. 

Notwithstanding all these dangers in the lamp itself, it would seem as if 
accident was guarded against in a manner as nearly perfect as possible, by 
the requirements that glass globes, closed at the bottom, and with spark 
arresters at the top, should be used. But 

THE INCENDIARY HAZARD OF THE ELECTRIC LIGHTING SYSTEM MOST TO BE FEARED, 

Is that subtle element which exhibits none of the ord ; nary premonitions of 
fire, but under the most innocent guise, and at the most unexpected moment, 
secretly performs its work. While persons are generally conversant with the 
dangers attendant upon the handling of gunpowder and ordinary illuminants, 
this introduction of a streak of lightning into their houses is new business 
to them. 

Almost any of us would know enough about it, however, to feel that it 
would be of the highest importance to have the conductor of such a " streak " 
large enough and well enough insulated to carry its burden off again, and 
not leave it on the premises. This is just what is required in the electric 
lighting system. 

First, as to conductivity. If the wire is not large enough, it becomes 
heated sometimes to redness, and will ignite combustible material with which 
it may come in contact. The insulating material of a main conductor was 
recently ignited in Philadelphia from this cause, and the Paris Exhibition 
furnished other examples. 

A WIRE OF A PROPER SIZE 

For supplying a circuit of ten lights would not have sufficient conductivity 
for thirty, and an attempt to use it for such a number would result disastrous- 
ly. The electric light companies are, however, as much interested as the 



36 



underwriters in seeing this point well guarded, inasmuch as a loss of power, 
damage to their wires and a temporary interruption of the circuit would re- 
sult from any accident. There is, therefore, no doubt that the suggestion of 
the underwriters with reference to the weight of the wire will be cheerfully 
complied with. 

Imperfect insulation is destined, no doubt, to be a more prolific and insidi- 
ous source of electric incendiarism than any other. At least, more accidents 
have thus far been reported from that cause. 

In Philadelphia a telephone switch-board was charred and the wood work 
of the room put in flames by a flash, as of lightning, from a telephone wire- 
which is supposed to have come in contact with an electric light wire; and 
similar accidents are reported from Boston and New York, and two or three 
from Detroit. On another occasion two telephone boxes in Philadelphia were 
instantaneously burned from a similar cause. The wood work over the en- 
trance to the Germania Theatre in New York, was 

FIRED BY CONTACT WITH THE WIRE, 

Caused by a break in the insulator. In the same city an electric light wire 
fastened to tin, heated the latter to such a degree that the wood underneath 
was ignited; and there was a similar occurrence in Cleveland. A damage of 
some $300 was recently caused in Chicago by the crossing of a telephone 
and electric light wire. The flame in the telephone office jumped two feet. 
Chicago also records a case of broken insulation, which permitted the elec- 
tricity to surrender to the attraction of a convenient steel nail, and set fire to 
the building. The power of an uninsulated electric current to create fire was 
strikingly shown at the Paris Exhibition, where the gold chain of an inquisi- 
tive gentleman made a connection with two conducting wires, making his 
chain red hot, and setting fire to his vest. 

Many more instances of accident from imperfect insulation, might be 
adduced, but the above are sufficient to show the necessity for the very strict 
regulations provided by the Underwriters with reference to this feature. 

THERE IS DANGER TO BE FEARED, 

Not only from the contact of wires and from the breaking of insulation, but 
also from the intervening of some imperfectly conducting substance between 
wires, as, for instance, the ingoing and outcoming wires of the same circuit. 
It has been asserted that even a film of water, holding mineral matter in 
solution, would bo sufficient to provide the electric current with a " short 
cut " from wire to wire, and cause ignition of inflammable material. In such 
a case the current first heats said material, then chars it, finally establish- 
ing a series of minute electric sparks and setting it on fire. 

Perfect insulation requires that electric light wires should be securely 
fastened a proper distance apart; otherwise they may come momentarily in 
contact and then separate, in which case an intensely hot electric arc is estab- 
lished, capable of igniting contiguous material. A regard for proper insula- 



37 



tion will not permit the " grounding " of wire?, ns the danger that the cur- 
rent will, in this manner, be conveyed to neighboring pipes or wires is in- 
creased. 

As in the matter of conductivity, so in that of insulation, self-interest 
will insure a considerable degree of care on the part of the electric light 
companies, although the dangers pertaining to the latter are not as readily 
detected as in the case of the former. It is probable that we have more 
reason to fear 

THE ELECTEIC LIGHT AS AN " OBSTKUCTIONIST " 

Than as an incendiary. So long as we had only the main route telegraph 
wires, we did not feel endangered, but when to these are added the wires of 
the District telegraph, those of the telephone, and now those of the electric 
light, the metallic net work, aside from any electrical dangers, presents a 
serious barrier to the expeditious extinction of fires. This danger would be 
very materially increased by the general adoption of the electric light, and 
consequent multiplication of wires, and it is worthy the attention of the Un- 
derwriters now, before it is too late. 

Not only the bulk of the wires, but the electric currents which they trans- 
mit, present obstacles to the proper working of the fire department. The 
interference of these wires with those of the fire alarm system, may prevent 
the speedy sending in of an alarm, and entail the loss of those few precious 
moments at the beginning, which, energetically employed, so often prevent 
a disastrous conflagration. During the present month, 

A SLIGHT CONTACT OF AN ELECTEIC LIGHT WIEE WITH A FIEE ALAEM WIEE, 

Rendered temporarily useless fourteen signal boxes in the heart of New York 
City. The Fire Commissioners of New York City have taken legal steps to 
ascertain whether the electric light companies cannot be restrained from 
running their wires near those of the fire alarm system, and whether they are 
not liable for any damages. The Insurance Chronicle, of New York, is au- 
thority for the statement that " induction from the electric light is such at 
times as to almost cut off police and fire communication by reason of the 
loud buzzing." Numerous instances have occurred where fire alarm wires 
have been melted and the boxes destroyed by interference with electric light 
wires. 

But the most serious danger which we have to consider, in this connec- 
tion, is that which menaces the lives of the firemen. The secret and almost 
mysterious character of this danger will multiply, many fold, its power as a 
hindrance to fire extinction. The care which the fireman will take to avoid 
these wires will, by just so much, impair the effectiveness of his wo;k. 
There may not be an electric light wire on or in the building at all, but the 
knowledge that they do exist in the vicinity, and possibly within a foot, will 
cause the fireman, surrounded, perhaps, by blinding smoke, to be extremely 
cautious about laying hold of a possible streak of lightning that may 



38 



PRODUCE INSTANT DEATH OR PRECIPITATE HIM FROM A DANGEROUS HEIGHT. 

As illustrative of this life hazard, which has so important a bearing on 
that of fire, we may refer to a few incidents. A serious, if not fatal accident 
happened to a young man named Chas. Lubbis, at Denver, lately. He was 
fixiug the wires, when he was precipitated a distance of twelve feet to the 
ground. The London Times of Dec. 15th refers to the fact that a man at 
Hatfield House was instantly killed by coming in contact with the wires. 
Mr. Brush himself, the inventor of the system in use here, has been seriously 
wounded, and Mr. Wm. J. Denver, of Springfield, Mass., was knocked down 
by a shock received from an electric light wire, through a fire alarm wire, 
the latter being reduced to molten iron in his hand in the fractional part of 
a second. 

Suppose a fireman, during one of our rainy winter nights, stands upon 
a tin roof and cuts an electric light wire. At the instant the wire is cut, and 
during the infinitely small period that one of the wires remains in contact 
with the axe, the electric current, in search of the shortest route to the 
ground, may pass from the axe to, and through the man, producing instant 
death. These considerations show the necessity for 

the "cut off," 

Which must be provided as near as possible to the entrance of any building 
using the electric light. These " cut offs " should be as easy of identification 
as the gas meters are now, and, in case of fire, one of the first duties of the 
firemen would be, by their use, to deprive the building of its electric cur- 
rents. An arrangement in the nature of a switch, whereby the ingoing and 
outcoming wires could be connected at will outside the building, would accom- 
plish the desired result without interfering with the action of other lamps on 
the same circuit. The original rules of the New York Board of Underwriters 
required the supply of electricity to be stopped, by means of this " cut off" 
when not in use, but the more recent rules do not have this proviso. 

As the placing of these " cut offs " will entail additional expense upon the 
electric light companies, and as the latter look upon them rather as a nuisance 
than a benefit, the underwriters will meet with more opposition to their de- 
mands on this point than any other. It is fair to say, however, so far as 
San Francisco is concerned, that the manager of the Brush Electric Light 
agrees to be governed by the New York rule in this respect. 

It is reasonable to suppose that all the dangers thus far referred to, will 
increase with the age and multiplicity of the wires, and with that familiarity 
which breeds contempt and carelessness. The 

INSULATING MATERIAL WILL WEAR OFF, 

Especially where subject to abrasion, and the sagging of wires will bring them 
in contact. 

There is no doubt, therefore, that so far as the underwriters are concerned, 



39 



pipe lines should be given a very decided preference. The Edison Electric 
Light Co. is introducing such lines in New York, the wires (which in the 
case of the street "mains" might more properly be called rods) being insu- 
lated, inside of pipes, and introduced into buildings very much as gas pipes 
are now. To guard against accidents from an electric current, in excess of a 
wire's conductivity, this company has also introduced an automatic " cut off," 
consisting of a short piece of easily fusible lead wire, placed at suitable 
points, and which melts when the current becomes too great for the wire 
beyond, thus cutting off the flow. 

THE EDISON LIGHT COMPANY 

Have favored me with a very explicit description of their system, in its 
bearings upon the fire hazard, which I shall be pleased to have examined 
by any parties interested. 

They thus summarize the advantages claimed by them: 

1st. Outdoor system exclusively encased in iron armor. 

2d. The house system encased in non-inflammable insulation and further 
protected by coverings of a substantial and durable character. 

3d. An absolute safety valve, actuated by an immutable law and operating 
to instantly withdraw the electrical energy from the point of accident. 

4th. The concentration in one protectible building of all the, at present, 
existing sources of accidental fires, explosions, etc., etc., now scattered over 
each mile square of a city's area. 

This last feature is not exclusive with the Edison Company, and must be 
recognized as a strong point in favor of the electric light. 

The Boston Common Council has authorized pipe lines, and a company 
here has been granted a franchise. 

The Mayors of several cities have declined to permit the use of aerial 
electric light wires ; notably, Mayor Thompson, of Detroit, who vetoed an 
ordinance authorizing such a system, and adduced many strong points in 
support of his opposition. The Mayor of Pittsburgh also vetoed a similar 
ordinance. 

THE ACTIONS OF THE UNDEBWKITEES 

With reference to the hazard under consideration are very generally known 
to you. The rules of the New York L'oard have been accepted in many, if 
not all, instances, as the standard, this being the case in Chicago, Philadel- 
phia, Detroit and San Francisco. These rules have been very materially 
amplified and made more explicit and simple since their first promulgation 
last year, and our San Francisco standard should be so changed so as to 
agree with the amended form. The new rules designate the weight of con- 
ducting wire for arc lights; require an automatic cut-off at the junction of 
wires of different sizes in the case of incandescent lights; prohibit ground 
circuits, and designate the character of insulation. They further provide 
that wires passing through walls, floors or partitions shall be encased in 



40 



substantial insulating tubes, so placed, in the case ef exterior walls, as to 
prevent rain water from entering the building along the wire. It is also 
required, where inflammable material is exposed, that a wire netting shall 
be placed below an arc-light globe to keep the pieces of the latter in place in 
case of breakage. 

AN ENTIRELY NEW REQUIREMENT 

Is that of the "automatic shunt," to be attached to the lamps themselves, 
whereby a " short cut" for the electric current is provided, when it becomes 
too powerful for the capacity of the lamp. It is also stipulated that com- 
panies whose lights are permitted to be used by the underwriters, shall test 
their lines for ground connections at least once every day, and make a weekly 
report of the results of such tests. 

Upon whom shall the duty of seeing these requirements fulfilled devolve ? 
Manifestly, not upon the inexpert policy-holder, for he would much rather 
do without the electric light altogether, than to stake the validity of his entire 
insurance upon his skill as an electrician. On the other hand, the illu- 
minating companies seem to be hardly the proper parties to pass upon the 
character of their own work. They would, no doubt, act conscientiously at 
the outset, and their certification that certain work had been performed, in 
accordance with the regulations, could be relied upon; but as time wore on, 
these certificates might degenerate into a matter of form, workmen might, 
without the knowledge of their employers, have recourse to the easiest way 
of doing things, and the assured themselves might "wink at" imperfection 
of construction, to them apparently immaterial, for 

THE PURPOSE OF SAVING EXPENSE, OR A DISFIGURATION OF THEIR PREMISES. 

It is evident, therefore, that this certificate of proper construction should 
be either issued by, or receive its final endorsement from, a representative 
of the underwriters. In San Francisco this representative might be the 
surveyor of the Board, but as all companies are not members of the Board, 
it is possible that the fire marshal, or an officer of the fire patrol would be 
better. One or two days careful study and investigation would provide him 
with sufficient technical knowledge. On completion of its work, the light 
company might furnish certificates, of an approved form, to the assured, the 
latter to present the same to the representative of the underwriters for his 
endorsement. The insurance companies could then be notified, by means of 
the fire marshal's reports, for instance, that a certain arrangement for 
lighting had been examined and approved. The permit for electric lighting 
to be attached to the policy need then contain only one condition, viz: that 
no change in the arrangement should be made without the consent of the 
underwriter's representative, and the approval of a new certificate by him. 

It is proper, in this connection, to mention what has no doubt occurred 
to all of you, the fact that under the form of policy now generally in use, 



41 



NO PEEMIT FOR ELECTEIC LIGHTING IS EEQUIEED, 

None of the printed conditions being susceptible of such construction as 
would prohibit it. In ordering new editions of policy blanks this point should 
not be overlooked. 

It is evident that there are many features of importance that have not even 
been touched upon in what has been said. This is not the result of over- 
sight, but is chargeable to the physical impossibility of condensing any con- 
siderable portion of the facts and thoughts suggested by the subject into a 
becoming space. 

That the future of the electric light is to be a grand one none can doubt, and 
that it will lead up to other inventions is already being evidenced. The elec- 
tric light wires at St. Petersburg have been recently used for the working of 
fire pumps, and similar wires are providing facilities for manufacturing and 
transportation. Hence, the necessity for carefully watching the hazard, to 
the end that, when eventually, as in Aladdin's day, space is annihilated, 
palaces built, and all seeming impossibilities accomplished by the genie of 
the light, we, as underwriters, need have no reason to question the bene- 
ficently inspired character of the prophetic Arabian lights, or the modern 
advent of the "Wonderful Lamp." 

President — Gentlemen: That is an unnsually interesting and 
a very valuable paper. Personally I am under great obligations 
to Mr. Carpenter for his able treatment of the subject. I think 
it would be perfectly in order for this Association to put them- 
selves on record, by voting Mr. Carpenter a vote of thanks for 
the very able manner in which he has sifted the subject. I con- 
fess, myself, that while the subject has interested me very much, 
I have not had the time to look into it as thoroughly as Mr. 
Carpenter has. I hope the Association r will recognize Mr. Car- 
penter's work. 

Mr. Gunnison— I think I am as much interested in this sub- 
ject as any one is. To tell the truth, our President here, honor- 
ed me with the appointment on that subject of the Electric 
Light. I did not feel myself capable of giving you an interest- 
ing paper on that subject, and I fortunately succeeded in get- 
ting Mr. Carpenter to take the subject off my hands; and I think, 
as well as others of the Association, that we owe him a vote of 
thanks. I would, therefore, move a vote of thanks be given to 
Mr. Carpenter for his able and instructive paper on the Electric 
Light. 

Seconded by Mr. Cole. 



42 



President — Gentlemen, you have heard the motion, that a vote 
of thanks be given to Mr. Carpenter for his able and instructive 
paper on the Electric Light. 

Carried. 

Mr. Carpenter — Mr. President, I am glad that I have been 
able to entertain the Association with such a dry subject, and I 
am glad that they also voted their thanks before they heard from 
Mr. Roe. If in order, Mr. President, I move that Mr. Roe be 
^lvited to say something on the subject, and, after he does so, it 
may be possible that they will not think so much of what I have 
said. 

President — Mr. Roe, have you anything to say ? 

Mr. Roe — Nothing; simply to call attention to the difference 
in the requirements of this Board and those in New York. I 
have thought, in the absence of your appointing any committee 
of gentlemen who are electricians, as they have in New York, if 
you have confidence in their regulations, you could adopt them 
just as they are. It has been done in other cities, and we are 
ready and glad to comply with them. There is a little differ- 
ence between them and your regulations. Mr. Carpenter read 
something in regard to the automatic shunt and cut-off, in which 
you differ some little in your regulations from those in New York. 
I came here to answer questions on this subject, that is all. 

President — I would like to ask you to account, if you can, for 
this sheet of flame referred to in the paper by Mr. Carpenter. 

Mr. Roe — It is very hard to account for that. You see a lot 
of things in the newspapers regarding the risk of the electric 
light, put in there from gas interests, and so forth. I do not be- 
lieve all I see about it. Aflame two or three feet long is a pretty 
big story. 

President — It seems to be common. Mr. Carpenter speaks of 
several cases. 

Mr. Roe — I do not think so. 

President — Gentlemen, have you any queries to put to Mr. 
Roe? 



43 

Mr. Dornin — Mr. President, it was not my fortune to hear all 
the paper read by Mr. Carpenter, but from what I did hear of it, 
I am satisfied that there are matters in it of great and immediate 
value, and, without reflecting upon the other papers that have 
been read here to-day, I hope the President will call the mem- 
bers together for the purpose of taking up Mr. Carpenter's pa- 
per, and that it may result in the issuance of a large edition, in 
order that companies may place copies of it in the hands of their 
agents in places where the electric light is being introduced. 
We shall be obliged to meet this question. A certain indorse- 
ment must be made, and it will have a greater weight if we have 
a document behind it as to the influence in the community. 

President — Any further remarks on the paper? If not, Mr. 
Gunnison, are you ready with your paper ? 

Mr. Gunnison — Mr. President, we want to hear " The Knap- 
sack" this afternoon. If the Association would like to listen to 
a little nonsense from me for fifteen or twenty minutes, all 
right; but we have got to have that " Knapsack" this after- 
noon. 

President— I think, Mr. Gunnison, we will call upon you for 
your paper, and after that we will devote the balance of the 
afternoon to " The Knapsack." 

Mr. Carpenter— I will state, Mr. President, that I will leave 
my paper with the Secretary. 

President — Yes; very well. 

ME. GUNNISON'S PAPEE ON USAGES OF UNDEE- 
WEITING. 

Mr. President : By a swap with Mr. Carpenter, to whom you assigned the 
duty of addressing you under this head, I find myself called upon to answer 
the call, and make an excuse for not addressing the Association on the plea of 
unavoidable absence from town; while, from the able pen of Mr. C, you get 
an excellent address upon the hazard of the electric light, a new and interest- 
ing subject, and a dangerous factor in the field of insurance. By this trade 
the members of the Association, and all insurance men as well, get some- 
thing worthy their attention ou electric light hazards, while I admit that 



44 



they lose an equally meritorious article from the same on the old and thread- 
bare subject of usage in underwriting. I know that in neither case have I 
the ability to give you even a readable paper, and I believe that I have done 
you and the Association an actual kindnes3 in securing Mr. C.'s services on 
the one, and neglecting to address you myself on the other. 

I admit, Mr. President, that I did make a desperate effort to the end of 
writing something, but not fully understanding the aim and scope of the 
subject, I had recourse to Webster's Unabridged, and found that " usage " 
means custom, habit, etc. That custom* long continued, makes law, and 
thereupon I concluded that you might have expected a dissertation upon 

THE LAW OF INSUEANCE . 

Now, Mr. President — and I say it with the highest respect, both for the 
office and the man — I was prepared to give you credit for a large amount of 
originality, in your jokes, but I never considered you capable of so stupendous 
a "whopper" as that! Does any one among us believe that there is any 
such a thing as law, as applied to insurance? Why, sir, insurance is a neces- 
sity, and "necessity knows no law!" Have not the brightest minds of the 
profession written enough manuscript over, to cover the walls of the new 
City Hall, with all its spurs, dips and angles, about the laws of insurance; and 
can we not turn to their pages in every insurance work in Christendom? 
And yet, do not we poor abused adjusters, when threatened with the law, 
have to trust to our own overwhelming good judgment and hard cheek to 
carry us through? And do we not just get right down and crawl out of the 
smallest possible little knot-hole of a compromise so quickly as to make the 
inexperienced head of a new beginner swim with wonderment and astonish- 
ment? Yea, verily! 

But, while you may, from your exalted position of President, have been 
so unwise as to expect that I, as swapee of Mr. Carpenter, would get my 
work in on the old and beaten track laid out by wiser and steadier heads 
than mine, along 

THE GIDDY AND POETICAL HEIGHTS 

Of usage in underwriting, I shall, nevertheless, take the liberty to consider 
the word to mean habit, and flounder around in altogether new paths, and 
leave the searcher after knowledge, on the main subject, to pore over musty 
volumes and delve in the mines of wealth to be found in the wisdom-teach- 
ing ideas of abler authors. 

Let me, then, take as my theme, the "Habits of Insurance Companies 
and Insurance Men," and try to look at the matter through the eyes of the 
great, unwashed crowd (who are as much interested in the subject as we), 
who are known to us as the assured. The men who insure are the bone and 
sinew of the business! Without them, where, oh where, would the noble 
adjuster be? Echo answers, where! The insured is the meat and drink of 
the adjuster — especially after he has hatched into a claimant for loss after a 



45 

fire. To gobble up such an one, the festive adjuster sits down to his work 
with as much gusto as he does to our famous annual dinners of the Under- 
writers. And why should we not listen to the insured? especially, as in ninety- 
nine cases in a hundred, they know more about th* business than we do; 
that is if they never have had a loss. If they do have a loss, their wisdom 
teeth get knocked back into their jaws so far that they never venture an 
opinion on insurance again— in the presence of an adjuster. Having chosen 

SE SO MUCH AT VARIANCE WITH WHAT MIGHT AND DOUBTLESS WAS 
EXPECTED, 

I will persist in my eccentricity and begin at the tail end of the subject, 
and, if time and patience fail, and I never reach the head, please remember 
there is a head somewhere; for is it not written: "Where there is a tail there 
you will find a head also?" All the oldest adjusters here present have 
listened, many and many a time, to wise interpretations of insurance men's 
habits from the perfumed lips of the dear people; from the bombastic country 
Justice of the Peace down to Mrs. Bridget O 'Flaherty of Tar Flat; and it 
may be that the newly-fledged " cincher " would like to get an inkling of 
what he has yet got to hear a thousand times, if some irate loss-grabber 
doesn't shut off his wind before he gets initiated into the mysteries of how 
to "cinch" gracefully and politely. 

Having made up my mind to take up this branch of the science of insurance 
just because I was painfully aware that I did not possess sufficient ability 
or other necessary accomplishments to fulfill your expectations, I suddenly 
came to the conclusion not to write anything at all, and, Mr. President, 
that is the only resolution made about January 1, 1882, that I have been able 
to religiously keep." 

Previous to that, however, I had written to my old friend Sam. Clemens, 
known to a select few as " Mark Twain," who lives at the fountain's head of 
American underwriting, and asked him to favor me, on the score of old friend- 
ship, with his ideas of the habits of insurance men, etc. I did not offer him 
money as a fee, because I knew too well that he would have accepted it! I 
told him I wished to read it before the Underwriters' Association of the Pa- 
cific, which association was composed of all the insurance talent on this 
coast— in fact, had nothing but talent in it— as soon as I had handed in my 
resignation, which I intended to do the moment I had finished reading his 
essay, in order to protect myself from a "mob. "Mark" tumbled to the 
idea, and shortly thereafter I received the following letter enclosing a manu- 
script that I had to copy before I could read it: 

"Hartford, Ct., Jan. 31st, 1882. 

My Old Playmate— Your sweet-scented note, asking a favor of me in your 

dire necessity, came to hand more promptly, I imagine, than it would have done 

if it had contained a $500 greenback as a fee. The fact that this neck of the 

woods is the great center of insurance companies of America, makes it quite 



46 



natural and proper that I should get inspired upon the subject of insurance 
companies and their habits, and hence the enclosed — while the consideration 
of old friendship and companionship would never have induced me to take 
this trouble to oblige you or any other man. I have never forgiven you for 
your wicked and diabolical attempt to imitate my sweet and silver tones in 
the window scene, and ask as an infliction upon your fellow scamps of the 
Fire Underwriters' Association of the Pacific, that read the enclosed essay to 
them in the same tones, taking your key from the same scene, as a poor 
singer gets his key by repeating the do, ra, mi of the singing book! It is a 
wretched imitation of myself, and I offer it as a punishment of the insurance 
men's sins! Under no consideration are you to allow this to go to press, as I 
reserve the right to copy right all my writings. ; My personal recollection of 
some of the old underwriters of the Pacific, enables me to speak truthfully of 
them, and I only regret that I cannot immortalize some of the more recent 
lights in the business! Take the little scribble in welcome! Sail in, and God 
bless you! Yours, as ever, 

Mark Twain." 

The window scene, to which he refers, is the one where " Mark", when a 
boy, had run away from home, and not getting back till after dark, and fear- 
ing a whipping, crept into his father's office to sleep on the sofa. His father 
was a Justice of the Peace and acting Coroner. During the afternoon a man 
had been killed, on the street, and the body brought in and laid upon the 
office floor, to await inquest in the morning. "Mark" thought he discerned 
the faint outlines of a man's body, by the dim starlight through the window, 
but concluded it was a delusion. As the moon arose, and slowly advanced 
along the top of the window, he became aware that it was a reality! And 
now, if you will allow me, I will repeat what happened, in order to get the 
"key," which simply means a poor imitation of "Mark Twain's" peculiar 
tone, and long, slow, drawling manner of speaking: 

" I turned my face to the wall and counted one hnndred! And still I could 
not sleep! I sat up again, and there, upon the floor, I could see the whole of 
a man's white face and bare bosom! And the moonlight crept down and down 
over the chest, and below the nipple, and there was a ghastly wound upon 
the chest! And there was blood upon that wound! — I went out through the 
window! I took the sash along with me! I didn't need the sash, but it was 
handier to take it than to leave it! So I took it! I went home, and they 
whipped me! I enjoyed that whipping!! 

HABITS OF INSURANCE COMPANIES AND INSURANCE MEN! 

An insurance company is usually started by a set of men who are looking 
around for some way of euchreing a living out of their lellowmen with- 
out giving anything in return. These men seldom have any capital, of 
their own, or if they have they take the precaution of making it over to their 
wives and sweethearts, or bury it, so as to prevent the poor dupe of an insurer 
getting hold of anything w T hen he has a loss. They put up a show of capital, 



47 

sufficient to deceive the authorities, until they get their charter— which means 
until they get a legal right to swindle the community— and then go right off 
and invest it where no one can get hold of it through the law. Having done 
this they get up a policy blank so full of conditions and things that the most 
highly accomplished and trained Jew in the land can't get a cent of indemnity 
when a fire catches him— perfectly unawares— " S' help me, Moses!" The 
poor and innocent insurer, having paid in his premium, believing everybody 
as dishonest as himself, and having insured his dwelling house for twice its 
value— by fooling the agent— and having a terribly unfortunate calamity hap- 
pen to said dwelling, suddenly finds himself kicking around in a labyrinth of 
conditions, in the insurance policy, driving him almost to desperation and 
making him happy at last — if he escapes the State's prison! 

The insurance man is the hardest hearted man in the world! Having 
gotten your money he cares nothing for your afflictions! He is a tyrant by 
nature and robber by habit, and delights in the troubles and trials of his 
fellowmen! His whole study is how he can prevent you getting paid for de- 
stroying your property by fire! He cares nothing for the sufferings of others, 
but when he finds you trying to get back your money, that you have been en- 
trusting him with for years, receiving, in return, nothing but worthless paper, 
called a policy of insurance — he swoops down upon you with his conditions, 
and makes you feel, at most, as if you were the dastardly thief and fraud that 
he is himself. Such are the habits of insurance companies, that they will send 
their soulless adjusters, even into the southermost end of Utah Territory, to 
bulldose, browbeat and frighten their poor dupes into accepting not more 
than fifty per cent, more than their actual loss, when the poor fellows intend- 
ed and expected to get at least double the value their property which they 
had risked their personal liberty to burn — like brave little men! 

And who do these grasping monopolies employ to do this dirty work? 
None but the most debased, the sharpest, trickiest, sleekest, coldest and 
slimiest men that the country affords! These adjusters proceed at once to 
adjust you out of house and home. These unconcionable scamps point trium- 
phantly to the conditions. You find yourself over-insured, you are on leased 
ground, your chimney did not come to the ground — till the fire brought it 
down — your goods were stolen, not burned, and your precious stones were 
not covered because not specially mentioned; in fact, you are soon glad to 
compromise the loss by getting permission to replace your property with 
your own money, and pay the fees and expenses of one adjuster to and from, 
especially from. 

The insurance men are all rascals. We all know that. No capitalist takes 
the stock of an insurance company unless he be a natural born, bloated bond- 
holder. If he isn't, he naturally gravitates that way! Look at President 
Hipcorns of the "Localest of all the Old Ones! " No one can look at him 
without seeing, in that narrow, contracted, pinched-up visage and little 
diminutive form, the desire pictured all over his physique to swindle some 
poor devil of an insurer out of the proceeds of his industry and his patient 
ingenuity in burning! Doubtless, it is an almost irresistible impulse on the 



48 



part of Mr. H. to set fire to some man's property, just to see his Vice-Presi- 
dent go in and cinch the insured! And look at the latter — said V.-P. — who, 
with massive frame and sledge-hammer fists, walks into the poor claimant, 
picks him up, turns him inside out, frightens his wits out of him, and then 
blandly pays him total loss in order to show the unbounded liberality and save 
the reputation of the aforesaid " Localest of all the Old Ones! " 

Then, again, the Havenly manager of the L. & L. & G., which means, 
when interpreted by a New York advertising agent, the Liverpad, Laid-on 
Good Insurance Company! — Lively & Lengthy & Graceful — Lord Love the 
Good! Who would think of taking to him as a Haven of safety from the 
storms of fire or sea ? Look at his broadshouldered massive form and fero- 
cious manner! What chance would a dead darky stand of saving the coppers 
on his eyes, even if said darky had lost his life in an heroic effort to burn his 
unsalable house on which he had paid premium at least twice its valuer 
And his well-known adjuster, Kinne to him in all respects, known as the 
Colonel, with bold, hard features, dark and lowering brows — how he delights 
in deeds of robbery and daring scenes of blood and thunder! Does he not 
believe that to insure in the Liverpad, etc., is sufficient honor to satisfy the 
ambition of a Tom Grant or an Aaron A. Sargent? 

Sometimes a long experience transforms the smooth, delicate pale-faced moth- 
er's darling into a fall-grown insurance fiend, and beneath the mild and pleasant, 
gentle seeming, you find the insurance man incarnate! Look at the slight 
and effeminate Joe, of Balker, Fell & Co., and also the sweet-tempered Gar- 
nishment of the Transi-Transitory Insurance Company!— and weep for your 
countrymen and your cousins across the water! There is Dormant, who 
keeps a rampant lion pictured on his signs and all over his papers, to fright- 
en unwary loss-seekers out of their wits! How he ever expects to get custom- 
ers to go into his office, between those savage-looking beasts, is more than I 
know! He is said to keep a Sexton who has a private burying-ground to in- 
ter the Lion's dead. What a grim old graveyard visage is his, to be sure! A 
glance at his terrible, cold-hearted eye would make an honest Jew, who had 
watered his stock wdth a watering-pot to increase the damage after the fire 
and keep the dust out of the eyes of the appraisers, just wilt in his boots and 
swear that the firemen did it all, " from my honor as a Jew! " 

We might continue the list indefinitely,^ and show conclusively that all 
these hard-hearted insurance companies and their conscienceless employees, 
have the unfortunate habit of trying to keep the insurers from realizing a 
profit on their investments! I know a case of the most heartless swindling 
on record. A high-toned Israelitish merchant, at one time a leading one on 
Sacramento street, had an insurance on his furniture and wearing apparel on 
Harrison street, San Francisco. A fire one day damaged some clothing in a 
clothespress, and the everlasting adjuster was sent around to swindle the 
insured out of his money! In the course of the adjustmeut the following 
conversation occured: 

" What else did you have in that closet?" 

"I hed von drunk." 



49 

11 One trunk— where is it?" 

11 Oh, it ish all purned oop!" 

" Burned up! Why the paper on the wall is not burned !" 

"Veil, I can't help dat! It ish all gone, so help me!" 

''But where are the iron bands, nails, hinges, etc.?" 

(Answer by one of the ladies of the familyj— "Dey ish down the vater 
gloset!" 

"Well, what was in that trunk, Mr. B.?" 

"Oh, mine Gott! (rubbing his eyes and crying) Dot drunk it had all the 
clotes of mine poor det mother! She died six veeks ago last Jewsday! She 
was verry rich, vonce ! She live in Paris, and she live in New York, and she 
had velvets, und satins, und silks, und laces dot were worth $50 a yard! And 
I shust put all her clotes in dot drunk to remember her by< Oh, tear! Und 
day vas all purned oop, so help me, Gott!" 

And all the ladies added their pearly tears in chorus and in sympathy for 
the poor man and in memory of the virtues of the poor, dead mother. But 
did that hard-hearted adjuster shed any tears? Not a whimper! He just 
asked for further time, went straight to the Fire Patrol Captain and asked 
about that trunk. And that unfeeling hireling of the bloated underwriters 
told the adjuster "that trunk was not burned," that it belonged to the ser- 
vant girl, who claimed it, and that it hadn't $5 worth of clothes in it! Did 
this cruel adjuster pay this poor afflicted man the $1,500 that he claimed for 
the contents of that trunk? No, indeed! But he went into the big store of 
the insured and insulted the dear, innocent man by calling him a liar and 
making him give up his policy! 

Let us take another case. Mrs. Catherine O'Minnerty of the suburbs had 
a fire one night in her palatial residence — with a one-horse stable underneath 
and a chicken ranch in the parlor! But little damage was done to the build- 
ing, while the furniture was a complete loss, so she said. They saw the fero- 
cious adjuster coming down the street "wid blud in his eye," as Mr. O'Rooney 
expressed it. They were prepared for him, and they knew him by the big 
roll of papers, and the half dozen old furniture dealers behind him, waiting 
for a job to appraise damages! Mrs. McFlanagan, Mrs. O'Finnerty, Mrs. 
'Toole and Bridget O 'Grady all began to cry at the sight of him, for they 
knew that Mrs. O'Minnerty would be abused by this dirty spalpeen of an ad- 
juster, and, as soon as he got within hearing, Mrs. O'Toole began to cry as if 
her dear heart would break, and she said, said she, "Oh, dear! and Mrs. 
O'Minnerty has lost every stick of her furniture, and she has nothing to slape 
on this blissid night to be sure!" And then Mrs. O'Finnerty, she cried so 
piteously, and she said, " The dear childer haven't a rag to their backs, and 
the poor dears are all naked and stharving for want of shoes to their fut!" 
And Mrs. McFlanagan, she said, "The furniture is all burned to ashes!" 
And Miss O'Grady, she said, "The good Lord would bless the man that was 
good to the widder and the orphanless!" And Mrs. O'Minnerty herself was 
too overcome to spake a word! 
4 



50 



And do you suppose that this wicked and soulless adjuster drew a check for 
total loss for this poor, starving, homeless widow? Not a check! He just 
went and got an officer, and he went into Mrs. O'Toole's back bedroom and 
found the parlor furniture, consisting mostly of chicken coops, that had been 
carried out of Mrs. O'Minnerty's house; and he went into the cellar under 
the house of Mrs. McFlanagan, and found all of Mrs. O'Minnerty's bedroom 
sets; and in Miss O 'Grady's barn were all of the carpets stowed away — to- 
keep them from the dust; and in Mrs. O'Finnerty's stable were found all the 
children hidden under Mrs. O'Minnerty's wearing apparel, to keep them from 
being eaten by the beastly adjuster! And did he pay her all her loss? Not a 
loss! But the wicked wretch threatened to have the whole lot arrested for 
trying to obtain money under false pretences — and walked off! 

" And when we call for justice he answered with the cash." 

Another habit of the insurance men is to go to Sacramento every session of 
the legislature and prevent wholesome legislation for the relief and protection 
of us poor devils who, having no further use for our property — and finding 
we have got twice as much insurance as it would sell for — magnanimously 
conclude to turn over the ashes to the insurance companies! If it had not 
been for these insurance fiends we could have turned over ere this, all the 
old and worthless buildings in the State — and realized a mint of money! 
But, as soon as we get a bill before the legislature legalizing the sale, up 
comes a delegation of insurance sharps, headed by the stalwart V. P. of the 
Localest, and buys the whole legislature up with a drink of whisky here and 
a $20 piece there — and thus is the true ends of justice clipped! We believe 
that a law, ought to be passed, giving the right to insure for double the value 
and, in case of loss, making the underwriters pay the whole face of the pol- 
icy — even if the assured had no title, or in a moment of irresistible impulse, 
by command of the Deity, had set it on fire — for the good of the Democratic 
party! And in case the fire should not come for the space of five years, and 
the insured concludes to quit insuring, the underwriter should be made to 
refund all the back premiums they have so fraudulently collected, with inter- 
est — or be forever debarred from doing business in New Zealand! Why, we 
would exclaim, ought underwriters to keep our premiums, when no fire oc- 
curs? Is it not taking money under false pretences? Such habits are scan- 
dalous! But such is the condition of their conditions that our condition is 
hopeless! 

I am a householder and I own the furniture. I am insured! If ever my 
house burns, my appreciation and esteem for the abilities of adjusters of the 
Pacific Coast is such, that, if the underwriters send one of those to adjust 
me, I shall immediately declare I am not insured, that I did not own the 
property, that I never saw the inside of an insurance office, and, if they will 
forbear to adjust me, I never will enter one and will pay the fare and per diem 
of the festive adjuster back to his far western home, and throw in a chromo- 
for his wife! 



51 



One peculiar habit of insurance men is the wonderful facility and ease with 
which they can, seemingly, change their nationality! A full-blooded Yankee 
can turn into a bloody Britisher in the twinkling of an eye! Take the former 
and appoint him to the agency of an English company and he immediately 
turns into a stylish English nabob— switch-cane and all! For instance, Sir 

William, of the Gardeen! How quickly sprouted the mutton-chop whiskers 

in imagination! — and the nobby little hat, the Spencer or bobtailed jacket — 
and how tightly the thighs and calves filled out the London style! (Query — 
Were the thighs stuffed out or the pants cut in?) And so we have the stylish 
Londoner— even to the slippers and cloth gaiter-tops and all — adorning, in 
several cases, the plebeian legs of the much-despised Yankee. The represent, 
atives of the King of Beasts will ere long be doming a new suit, in which their 
mothers would not know them. It is said the manager of the Liverpad, etc., 
would, long ago, have come out in a full suit, but for the fact that he could 
not find an imported pair of pants long enough one way and short enough 
the other! 

The cheek of an insurance man is harder than " Pharaoh's heart." When 
a Hartford man slips on an orange-peel or pork-rind, placed innocently on 
the sidewalk for a purpose, he never tries to save himself by throwing out his 
hands, like other men, but allows himself to fall flatly upon the walk — like a 
piece of putty! The reason is that all Hartford men are insurance sharps, 
and if they fall on their cheeks no harm is done! They never insure in their 
own accidental insurance companies, for the snme reason! It is said that 
they carry out the scriptural injunction and always turn the other when you 
smite them on one cheek; it is such a pleasure to them to see you smash up 
your knuckles and dislocate your shoulder with the shock! 

In behalf of the poor insurance-ridden people of the Pacific Coast. 

THE HEAD. 

President — We will now call for " The Knapsack/' 

6ol. Kinne — Mr. President and gentlemen, I can only say 
that a portion of " The Knapsack " has been so ably read by rny 
friend Gunnison, and as it is getting late and we want to pro- 
ceed right to business, I will not make any comments, but 
pitch right in. In accordance with a notice filed among the 
archives of this Association, I have to read many articles— some 
shorter, some longer, some sweet and some sour — and there have 
been a number left out. The leader or editorial to this paper 
reads thusly : 



52 



THE CALIFORNIA KNAPSACK. 
Vol. 3. No. 1. 

Published by the Fire Underwriters' Association of the Pacific. 

C. Mason Kinne, Manager. Associate — Geo. F. Gbant. 



The following circular was dispatched to each member of the Association : 

Editobial Rooms, 422 Califobnia St., ) 
San Francisco, Jan. 28, 1882. J 



Mb. 



Dear Sir — Once more the demand for " copy " goes out to our patrons, and 
as an inducement for the brightest scintillation of wit and sparkle of talent, 
the Associate Editor has provided a valuable testimonial, which he offers as 
a prize for the best article which may grace our columns. 

There is also an admonition with our demand this year to the effect that 
some of the latent talent, which as yet has not unearthed itself, must come to 
the front or there will be a court martial of two or three that we have our 
•managerial eye upon. 

Between the above intimation of reward and punishment there is a broad 
highway of peace and happiness leading down to our editorial sanctum which 
you should travel with steps of pride, and it must be a cold day when you 
cannot provide something in the way of anecdote, personal reminiscence, or 
views on various insurance points. 

All manuscripts to be handed in not later than Feb. 15, 1882. 
Fraternally, 

C Mason Kinne, Manager. 



TO OUR PATRONS. 

Another year has rolled around, adding more gray hairs and wrinkles to 
the heads and features of all of us, but the bright smiles and warm hearts are 
as youthful as ever. 

As to the specials and adjusters, of course, we ought not to grow old. With 
good salaries, nothing to do but travel about in the palace car, dine at the 
best hotels and amuse ourselves for an hour or two in some pleasant village 
talking to our agent, or pleasing a claimant by paying him oil he asks, is cer- 
tainly not very wearing work, from the average manager's stand-point. 

But at all events we are here to-day, forgetful of expense account, of stage 
coach and buckboard, of dust and rain, of hash and hasheries, of dead towns 
and lying claimants. We are not worrying over ambiguous contracts, non- 
concurrent policies or excessive profits sweeping a just salvage out of sight, 
but looking into each othei's faces, bearing such an imprint of honest devo- 
tion to strict business principles as preclude the thought that you would go 



53 

for each other's best agent to-morrow, if you got a chance. For ono day at 
least we are brothers in the true sense of fraternal business relations and can 
let each other see the better and more unselfish side of our natures. 

But as the meat of these meetings is expected to be found in the reports of 
committees and addresses of members, it is only the purpose of the ''Knap- 
sack " to give it a flavor, add a certain amount of pleasing aroma to the solids 
and an enticing bouquet to the fluids. 

Speaking of things gastronomically, reminds us that our Associate Editor 
will have to see that the "Knapsack" is properly supplied with rations at 
the contemplated raid on the commissary, as stern duty calls the Manager in 
another direction. We are sorry for this, for even insurance men appreciate 
the necessity of well-appointed kitchens, and, with the rest of mankind, be- 
lieve that Owen Meredith is right in saying: 

" We may live without poetry, music and art ; 
We may live without conscience, and live without heart; 
We may live without friends; we may live without books; 
But civilized man cannot live without cooks. 
He may live without books— what is knowledge but grieving? 
He may live without hope— what is hope but deceiving? 
He may live without love— what is passion but pining? 
But where is the man that can live without dining?" 



ABOUT BKINGING GOOD INTO THE BUSINESS. 

If experience teaches anything, it teaches us that a mighty change is taking 
place in our business. Observe the insurance literature of to-day. It is 
plain, pithy and/?ee to all. Printed instructions now mean just what is said, 
whereas in those elder days the bewildered student construed ambiguous sen- 
tences which intimated more than they expressed and gave wide margin for 
varied opinion. The agent of to-day is made. Instances have ceased of ad- 
justers springing full-fledged into the field and gaining laurels off-hand with- 
out the drill of preparation. The leader of the future is grinding at his 
desk, giving ten good hours of conscientious work for a consideration. There 
is a change in the hazard created by new machinery, new appliances, experi- 
ment and invention. This changes the rate and alters the nature of expo- 
sures. The tone of the business is changed; it has gained dignity and im- 
portance. In our intercourse, one with the other, there is no longer the 
"mental reservation " — a promise of to-day has a value on the street. I do 
not claim this as a moral reform; said Hamlet to the Queen, " Assume a vir- 
tue if you have it not." There is a change. On the bench and in the jury- 
box, cases are not lacking where the verdict rendered in accordance with law 
and evidence is in favor of the defendant. Authorities are multiplying from 
decisions in various courts which have felt constrained to mete out even- 
handed justice and defeat the schemes of evil-minded ones whose claim is 



54 



based on false representation. These changes suggest this lesson: keep 
abreast of the time in which we live; keep step with the march of progress. 
It will bring good into the business. 



There are endless questions concerning a variety of topics which rise to the 
lips and get no farther. Ask plenty of questions, but apply to the right 
source. The Freshman is timid and has good fear of being set back by his 
elders. The Sophomore is big with importance and chaff — above criticism, 
yet ever sensitive. The Junior is your true mentor, for he is mellow with 
study, patient, having sympathy for a plodding brother. The Senior — (take 
heed lest you forget that he is the Senior!) his knowledge is for himself and 
his livelihood; yet in a community no larger than' our own it should be no 
difficult matter to get below the surface even of one having authority and gain 
information of a general nature. As I look through the list, I find those who 
stand best in the good opinion of the profession are not miserly of their 
thoughts. Thoughts! — it is a great gift, thinking. Few of us get farther in 
it than to think we think; for, to be a legitimate thinker, is to be one picked 
out of a thousand. All but idiots have minds that reflect, like a more or less 
perfect mirror, what they see, read or hear; to the few is given the power to 
invent by mental process, to analyze criticism. Next to thinking, and as an 
aid to thought, questions come naturally and spontaneously. Questions pro- 
voke discussion, and discussion fixes ideas. If you are pertinently in earnest 
in your business, you will find other earnest men ready to meet you on fair 
ground. 

It is the latest popular custom at meetings of this kind to comment on the 
faithful, hard-working "Local," to weave for his brow a chaplet, to portray 
his virtues even to the border of sentiment. He is deserving of it all, and 
more. I have thought of him, and wish to offer a suggestion for the consid- 
eration of this meeting. It is only a suggestion, for it is out of the common 
routine and wide open to criticism. My plan is to collect together at a con- 
venient time and place the local agents of the coast in convention, for the 
purpose of mutual exchange of ideas, and mutual benefit, all for the advance- 
ment of insurance and to bring good into the business. 

GEO. F. GRANT, 

Associate Editor. 

And now, gentlemen, we'll thrust our hand deeper into the recesses of our 
pack, and see what we shall bring forth of the good things stored away. 



CIRCUMSTANCES ALTER CASES. 

Scene, a large clothing store. Proprietor, Mr. Moses, behind counter. 
Enter to him a gent with a book under his arm. 



55 

Moses (aside)— Ah! here gomes that damned Assessor; I'll fix him! (To 
gent) — Goot mornin, my frent. How you vas dis fine day? 

Gent— Oh, very well, thank you. You have a fine, large store here. Big 
stock of goods, too. Now, I wonder what amount of stock you must keep 
on hand to fill so large a building? 

Moses — My frent, not so much as you dinks. You see dimes is hard and 
trade is very pad. I joost sell noting at all, so help me, Gott. But von must 
make a goot show, you know, so you see dese goats, dese pants, dese vests 
{handling them), all sheep goots; not much money in dem. All spread out 
zo as to make goot show, but not much vort. Times never vash so pad; I 
never sells noting. Yesterday von dam Irishman gome in and he says to me, 
Moses, vot you ask for dem goats? I show him mein goats and pants and 
vests — one kind, anoder kind, every kind — but he shtay here one half hour, 
never say one word while I try all I knows to sell him a goat or someding. 
Bymeby he says, " Veil, Moses, times is bad and goots is low, I vant one goat. 
Sho you just gome mit me to der saloon across der shtreet and treat me to von 
brandy smash, and I makes you an offer for de goat." And ven I go and 
dreat him vat does de dam rascal do? He just wipe his mouth on der sleeve 
so, and he valk right away, and never make me no offer at all! And dats der 
only customer vot gomes in dese dree days. 

Gent — Well, I'd just like to know about how much coin it takes to stock 
such a store. Say, how much, Moses? Perhaps I'd like to go into the busi- 
ness myself. 

Moses — Veil, mine frent, I am an honest man, and I tell you the truth, so 
help me, Gott! Dere is joost nine hundred and forty dollars in de shtore! 

Gent — Nine hundred and forty dollars! Why, man, what are you talking 
about? Why it is only six weeks ago you told me you had thirty thousand 
dollars' worth, and do you forget I am the broker who insured you for 
twenty thousand? 

Moses — Oh, you bees de insurance man! Veil, I vas one d — n fool not to 
know you again! I taut you vas dat d— d Assessor, and you know dose fel- 
lows just rob a pusiness man — rob him — rob him all de time So I fix up de 
goots for de Assessor, you see. But you bees de insurance man! Gome, I 
show you dat I am an honest man. You knows I been insured mit dose gom- 
panies five year, and I vas burnt out only dree times. You knows I am an 
honest mau. Gome! (Takes the gent down stairs.) Dere, you see all dem 
goots, I takes no advantage of the insurance! Dere, my friend, I gif you my 
word dere is dirty tousand tollars' vort of goots, and you insure me oDly 
dwenty tousand, you know. Mein Gott, vat a fool I vas to take you for dat 
d — d Assessor! 

Gent (taking out his book)— All right, Moses; I assess you for thirty 
thousand dollars. 

Moses— Vat you say? You bees the Assessor and de insurance man, too? 
Mein Gott, for what you not tell me you change your peesiness? So help 

me You bees one d— d rascal to sheet an honest man like dat? Vot for 

you play such d — d tricks to rob a poor man. D n!! 



56 



Gent — Good morning, Mr. Moses. Next time be sure of your man before 
yon show your hand. Remember, it's a bad rule that won't work both ways. 
[Exit.] 

COMMUNICATION. 

Poetland, Oregon. 

Editor Knapsack—So many good tnings will be offered you, that my mite 
will, I fear, not be entitled to even a place in the outside, with the panikin. 

Things don't hopper much in Oregon to adjusters. Railroads in which 
accidents are not allowed to occur run to all the towns where fires occur. 
Sleepers are common. The dangerous streams are all bridged. Where rail- 
roads are not built, magnificent steamers ascend the smallest rivers to their 
very source, or Concord coaches, drawn by elegant horses over macadamized 
roads, carrying you smoothly along. The highway robbers have all joined 
the church; the Indians have become rational beings, and only go on the 
warpath when Uncle Sam's grub gives out, and though occasionally you 
meet a "buck-board," the bucking horses have all been broke to ladies' use; 
and so I cannot, like my California brethren, give you very blood-curdling 
adventures. 

A snow blockade of ten (10) days — having to keep moving for thirty hours 
to keep from freezing — no grub to pass the time; ascending rivers in a crazy 
Indian canoe with only Indians for companions — where every sharp bend in 
the river had its legend of drowned miners — these things, while adding spice 
to the usual dullness of Oregon life, are of course mere trifles to those who 
travel in the wilds of California. I therefore spare you details. 

I recently met an adjuster who thought I was a Californian, who gave me 
the following, which I forward as a contribution from a wild untutored Ore- 
gonian. 

A LEGEND OF THE EHINE(o). 

In a beautiful country, where everything is evergreen, because the sun 
never comes out to dry the pearly rain drop which comes with delightful 
regularity, is located a beautiful city, grown fat with wealth and prosperity. 
The city is beautifully situated on a magnificent river, broad and deep. The 
country is called Oregon, and it is supposed that the dirt with which it was 
built came from Ireland. One thing is certain, no poisonous snake or reptile 
is found on its western slope. 

The people do not speak Irish, but the oldest inhabitants, the first fam- 
ilies, speak a "jargon." The people are known as " Webfeet. " This name 
was given to them by the first Californian who came, who supposed they 
were aquatic, because they found their nests so well feathered. The people 
generally took things very easy, making money without effort, but in the 
days I write of, existed on a well-known class who were an exception to the 
general rule. They were known as insurance agents. Existed, I say, be- 
cause at present the race is extinct, nearly. They w T ere so active and ener- 
getic that they were a source of great annoyance to the old business frater- 



57 



nity, who didn't believe in activity and enterprise. Every one supposed they 
were getting rich, but people were not aware of the goodness of heart and 
generosity of these agents, for, while they were supposed to be^making large 
commissions, some of them were secretly returning all their profits to the 
needy persons buying insurance from them. Such generosity should have 
brought its own reward. It did. A disease called the "rebate" broke out 
among them and became epidemic. "When the disorder was at its height, a 
meeting of all the agents was called to devise means to arrest its progress. 
One peculiarity of the disease was, that every one thought himself the only 
one free from it. After many plans were suggested, some one said that there 
was a fiddler in town who could cure any disease by the magic of his bow. 
Every fellow wanted to see the other cured, and it was decided to employ him. 
The fiddler made the rounds of the offices, playing enchanting music; the 
insurance man could not resist the bewitching strains. Principals and clerks 
followed the fiddler until every one in the business had joined the festive 
procession. The fiddler led them to the river bank and plunged into the wa- 
ter, still playing; all followed — all, save one; he was an adjuster as well as 
agent. When young a fairy had kindly stood for his godmother, and had 
given him a charm against water; some people said he wasn't born to be 
drowned — water didn't agree with him. He didn't believe in the water cure, 
so took a ferry-boat across the stream, expecting to meet his comrades on the 
other side. Alas! they never came. He mourned their loss, but consoled 
himself with the reflection that now he had the entire field to himself, and 
would do a smashing business. Strange to say, this was not the case. Peo- 
ple quit insuring, and it was impossible for him to live on the business, and 
he was obliged to shovel dirt for a living. On being asked what charm the 
music had for him, he said, " I thought it said, ' Come, I will take you where 
there is a gilt-edged steam planing mill, Well, where there is no rebate.* 
The man has just arrived from California, where no such thing is known. 
Other agents don't know of it, because the lumber is not on the ground yet." 

X. 
" X " is a little mixed in his metaphors, but the moral is good. 



. Conundrum— What is the difference between a livery stable and an omnibus 
building ? 

This was asked of the writer by one of the prominent (?) agents of 
a large Nevada town, after he had received a liberal share of the special's 
instructions, and when he was endeavoring to inform himself as to the intri- 
cacies of rating. 

REGISTER EARLY. 

Insurance men are ever on the alert for circumstantial evidence, and it is 
not strange that their wives, by association, should exhibit a similar tendency. 
A case in point recently occurred when Winsome William, of San Jose, stopped 



58 



over night in the city for the purpose of criticising, in company with his friend 
Carpenter, the fire hazard of a spectacular play. Mr. C, who then did his 
regular sleeping on the other side of the bay, left his satchel at the hotel 
where both were to stop, early in the day and registered, but as William never 
thinks of carrying any baggage for a trip of less than a week's duration, he 
had no occasion to visit the hotel until his dazzled eyes and excited brain 
sought rest, after the calcium light had cast its last reflections on the Ama- 
zons and the theatrical fairy had kicked her last kick. It was, therefore, a 
little difficult for him, or any one else, to tell whether he made his hotel reg- 
istry 'Mast night or to-morrow morning." 

The next night, having descended from the delectable mountains of San 
Francisco burlesque to the dead level of domestic San Jose, he was expatiat- 
ing on the glories of the previous evening, when his wife, in as casual a man- 
ner as circumstances and a remarkable self-control would permit, asked: 

" Where did you stop?" 

" Oh, Carpenter and I staid at the Lick House." 

4 'You did? Well, here is a copy of this morning's Chronicle, in which I 
find Mr. Carpenter's name in the list of guests, but I don't find yours." 

William doesn't often take a back-set, but he was non-plussed in this in- 
stance, and when his name appeared in due form in the next issue, he felt 
that he lay himself open to the suspicion of having "seen " the newspaper 
man. He now makes it a rule to register before dark, so that his name may 
get in the book in time for the next morning's paper. Not having much hair 
to lose, his practical good sense as an adjuster, teaches him that the salvage 
of that which he has, more than offsets any financial loss resulting from the 
payment for a night's lodging six hours in advance. C. 



WATER PRIVILEGES. 

It is said, once upon a time, that our good friend who now leads a lion 
about by the mane, waiting for the Sexton's bell to ring him to his meal oft 
the agents scooped in from the field, did, in his first trip for and under the 
tuition of the "General," proceed to Truckee, and soon thereafter forward 
to the said "General " Agent an application for insurance that he had worked 
into shape, and which included, among other items, certain amounts on a 
Turbine water-wheel, and also on the dam. 

All was satisfactory from the company's atand-point for some two or three 
years, when the assured began to think that to pay the premium for insurance 
on a pile of logs with twenty feet of water behind and running over it, was 
not profitable — to him — and so cut it out of the next renewal. 

The dam is there yet, with the silvery sheet of water still flashing back 
the rays of bright sunlight, all of which goes to show that Dornin always 
did believe that the best of anything was good enough for him; but this not 
being satisfied with writing on the water-wheel, but must go for the dam also, 
is a little too gilt-edged entirely. 



59 



A DREAM. 

For a whole year past, since the agents found out 
That adjusters and specials were safe without doubt, 
Their minds have been greatly perplexed 
As to what in the future will be their fate, 
If they too can pass through the heavenly gate 
When they go from this world to the next. 

Now, in order to stt troubled minds at rest, 
And to aid them in settling their anxious quest, 

I will tell you a little dream 
That came to me one night as I slept, 
And worried me so that I fairly wept, 

So real did it seem. 

Methought I stood by the little door 
St. Peter watches so carefully o'er, 

And looking the wicket through, 
Found a goodly company in sight 
Who seemed to think surely they were all right, 

And many of them I knew. 

There were Flint and Spencer with Capt. Magill, 
Firmly marching straight up the hill, 

And close behind them came 
Jacobs and Easton, Haven and Pope, 
Faces beaming with pleasure and hope, 

With others that I could name. 

Following them in unbroken rank 

Came Hamilton, Dickson, Hunt and Frank, 

Andrew Smith and Chas. R. Story, 
Carpenter, Bromwell and Landers, too, 
All looking as happy as if they knew 

They were on the road to glory. 

Brown and Bailey, Syz and Grant, 
Naunton and Butler, looking askant 

At the Lion led by Dornin. 
Potter, Jones and Farnsworth came in sight 
With Laton and Speyer, looking as bright 

As a beautiful May morning. 

Put Peter said—" Ere I unlock these gates 

You must each assure me you have never cut rates ; 

Also explain your position 
On the troublesome subject which all of you know 
Has made such ■ bobbery' there below — 

The matter of commission." 

" If while on earth you can truthfully say 
That you kept your agreements every day, 

And did not once deviate; 
Ne'er around the stump have the devil whipped, 
Nor in any way from the right path slipped, 

I will hasten and open the gate." 



60 



I saw that they all seemed perfectly dazed, 
And mournfully on each other gazed, 

And sadly they turned away, 
Save one, who could stand the required test ; 
I could give his name, if I thought it best, 

But prefer that you should say. 



Editor Knapsack: Dear Sir— To supply your demand for copy, we give the 
Association the benefit of three letters received by us during the past few- 
days, from our agents at different points on the coast. They merely show 
the "stuff" the different agents are made of. Our best wishes to the insur- 
ance fraternity is that every company doing business had an agent at every 
point made out of the same stuff as writer of letter No. 3. 

Yours truly, , Gen. Agent. 

Letter No. 1 is from one of our agents, who having failed to remit for 
premiums after policies had been in force three or four months, and had failed 
to take notice of at least two accounts sent him, was gently reminded that 
coin was wanted. It reads, viz: 

, February 15, 1882. 

Messrs. : Yours of the 10th at hand; contents noted. Now, in 

regard to balance due you of $60, nearly one-half of it is for my own policy, 
and I felt you could well afford to give me that, or at least wait until I 
could pay it; but you seem to be in such a hurry about it that I will try and 
relieve you before long — pay up and quit business. I have done your busi- 
ness for a long time, and as I supposed satisfactory, but I see you are not sat- 
isfied, and I think we had better dissolve. I have been urged by other com- 
panies to do business for them, who have offered me 20 per cent, for the 
warehouse insurance, and 25 per cent, for standing grain. They are good 
reliable Board companies. I have some money due me next month, and 
if I can collect it, will send you every cent due, and also all the books and 
papers that I have of yours, and will try my hand in doing business for other 
companies. Yours, etc. 

Letter No. 2 is from an agent to whom we had returned a dwelling house 

application for $150, at % per cent., explaining to him it was too small a 

premium to issue a policy for. It reads, viz. : 

, February 18, 1882. ' 

Messrs. : Gentlemen — Yours of the 12th inst. at hand, and will 

say that you have placed us in a very embarassing position. We accepted 
the application and approved it, and now you refuse a policy. We are com- 
pelled to insure it in one of our other companies. 

We are perfectly willing to listen to any suggestions you may wish to 
make, and while we do not presume to dictate the manner in which you 
should do your business, we must reserve the right of knowing something of 
ours, and with all due respect, we think we are better able to judge applica- 



61 



tions and their attending circum&tances here than you can be in San Francisco. 
This must not occur again, and if you are to refuse to issue policies when 
we ask for them, unless some radical error exists in the application, we think 
it would be best to return our certificate. 

Yours truly, & 

Note.— It has been suggested that we keep the above as a copy, so in ca6e our compa- 
nies criticise any of our risks, we can answer in same terms as our agent has written. 

Letter No. 3 is from an agent, it is a pleasure to correspond with, and from 
one who has his company's welfaro at heart. It is in answer to a rigid ques- 
tioning regarding moral hazard of the assured under one of his risks, and 
also regarding water supply, and reads, viz: 

, Feb. 19th, 1882. 

Messrs. Gentlemen — Your favor of 18th at hand, and we are 

pleased to see you are wide awake to your business interests, as here is no 
better guarantee to us and the assured of stability of your agency, and that 
our clients in Co., are insured. 

The fire of December 13, 1881, originated in the building adjoining Mr. A, 
and there was not the slightest question of moral hazard. His clerk, a most 
estimable young man, narrowly escaped cremation. At that time Mr. A was 

insured in the for $2,000, which was fully paid after six days' close 

account of stock by , adjuster. Mr. A has a family here, and has been 

in business a number of years. 

We trust you will accept no risk from us that you are not perfectly satisfied 
with as a business proposition. If it is not a proper risk for our companies, 
it is not for us, and we would prefer to refuse it altogether. 

A committee of citizens have recently chosen sites for new cisterns, which 
are in place, and are to be provided with 5-inch pipes from the mains, and 
have taps for fastening or coupling hose to the pipe in the absence of engines. 

The new cisterns are small, but the supply-pipe is supposed to furnish 
water to them as fast as the engine will draw it off. We are moving to thor- 
oughly reorganize for the summer campaign. The main pipe of the Water 
Co. is not as large as it should be, and in case of a large fire, would not 
furnish water for a large number of hydrants; but we are aiming to beat the 
common enemy at the threshold, if possible. 

11 Capt." Dimond, of the Phoenix, and " Col." Kinne, of the L. L. & G., 
were with us a week, recently, and from them you may obtain information of 
value. Yours truly, • 



SOME INSURANCE TALK AT A COUNTRY HOTEL. 

We were sitting before a roaring fire in a dimly lighted hotel office. Office 
by courtesy only, for it answered the requirements of a bar room, trunk 
room, reading room, card game and billiards. Not to forget a unique affair 
in the corner for lavatory uses, including three yards of revolving stuff not 



62 



unlike sand paper in feeling, while to the other senses it was an ancient and 
lish-like satire on Turkish towelling. 

Outside, rain poured gustily. Inside, dampness penetrated. An incessant 
drip, drip, drip, fell on the ear with the monotony of a sad heart-beat. 

We had the room to ourselves at last, discussing points of adjustment and 
what not, until "Aretas" straightened himself, and was delivered of the 
following: "Gentlemen, talk about total depravity, I tell you the country 
hotel is the root of all evil. The country hotel is original sin, it is the father 
of cussedness, and the nurse of crime. Attacking the human victim at the 
seat of intelligence, the stomach, it spreads through the entire system, leaving 
it a hopeless wreck. We eat, we drink, what ? Food, in its primal state fit 
for gods and goddesses. Fresh from gardens and shambles, rich, juicy, teem- 
ing with all health-giving qualities; but in the hands of that arch demon 
who rules over the frying pan it becomes a substance, a variety of substances, 
calculated to bring a nightmare that will attend your waking moments. A 
peaceable man by nature, I have seen times when I could shed blood, could 
dance on the grave of my dearest foe with maniac glee, all because of the 
leaden substance taken to support life, and familiar to your ears as ' beef 
steak, mutton chops and liver tea or coffee,' and as for the drink, infusion of 
pennyroyal and thoroughwort, ground beans with chickory. I hold it is a 
crime, a punishable crime/' 

11 Oh, stop!" said "Gravely." "These extreme and extravagant words de- 
stroy the very argument. I admit there is much to complain of, but that 
portly form, ' Aretas ' — that clear eye and fresh complexion — deny the wak- 
ing nightmares. I concur as to the location of your seat of intelligence, but 
let me tell of a meal at a country hotel. ' Omega,' over there, remembers it. 
It was at Lake Tahoe. Too busy to fish, we sent out a man. He returned 
with a trout which must have weighed ten pounds — a beauty, still alive, swim- 
ming in a tank, when we gazed at it. ' Did the landlord know how to cook a 
trout?' 'He should smile.* 'All right; serve it for breakfast.' What a 
night of anticipation! How we paused over scorched and soaked books of 
account to recall the trout breakfast ! How at last we toyed with knife and 
fork, an expectant light in our eyes! It came — ah, how we beamed! It came 
— ah, how we shivered! Cooked? It was cooked, until, in its charred remains, 
nor man nor surviving member of its family could recognize trout. Dry and 
greasy and bad, it might have been sturgeon or shark; it was not our break- 
fast. I do not go so far as you, ' Aretas,' in wishing to dance upon that land- 
lord's grave, but if I had heard of his accidental yet shocking death, a holy 
calm would have filled my breast." 

" I do not wish to choke any one off," said " Altamont;" "<but what crazy 
nonsense this all is! Now. I have been on the road as long as any one here, 
at a time, too, when there were no railroads — when days and nights in a stage 
coach were as bad as any hotel could be — and I have always found plenty to 
eat that was good and wholesome. I have adjusted more losses, and proba- 
bly know more about California, than any one. As for tea and coffee, why, if 
you don't like it, take milk. I never found any of their lawyers who would 



63 



not admit that any proposition was correct; and if you can't get milk, water 
is good enough for the time being, or whisky for that matter, although I don't 
ueed it. I can dictate two letters to different people on different subjects, all 
on the food and drink I get at country hotels. If that is not proof, what is? 
If any of you fellows want help in your cases, call on me. I am going to 
bed." 

" Just one minute," said " Berg." " I have a good thing on ■ Altamont.' 
Some years ago, I invited him to make a fourth at a little dinner given in 
honor of two Eastern brothers. We went to the old Louisiana Kotisserie. 
' Altamont ' didn't want soup, and, after eating a pound of bread, what, in 
heaven's name, do you suppose he called for? Pudding! — by the eternal — 
and, dash my buttons, if he didn't order soup while we were at dessert — 
that's the sort of a liver complaint he is." 

" Wild " here got the floor. " If I am allowed to get a word in edgewise 
with this convention, I put it up that the Oregon landlord takes the prize. 
Let me give you our experience. Time, 6 a.m.; season, winter; air, frosty — 
raining all the same. Drowned-out old stage du"mped me at the door; inside, 
old man asleep by the stove, boots nearly burned off him. 'Hello, pard,' 
shouted I, ' where's the landlord? ' Long stupid stare. ' I be,' said he. ' I 
want a room — nice room.' No answer. 'I want it now — right off.' Not a 
burned boot dropped. ' Can I have a room?' 'Waal, yaas, I presume so.' 
' All right; lead the way.' With a blink that would have turned an owl green 
with envy, he pointed a long finger, saying, ' Take any of them left-hand 
rooms as is empty on the left-hand side up-stairs.' I was making up sleep at 
the rate of forty-eight hours a day when I became conscious of a riot outside 
my door. That landlord had given me the room of a regular boarder— a gam- 
bler." "Wild " was here interrupted in his narrative by a voice, saying, 
"Gentlemen, it is late, and the guests complain that they cannot sleep for 
your conversation." " I don't doubt it," said "Wild;" " this house is like a 
drum — you can hear what is said in any part of it. I remember once a young 
married couple came here" — but another beautiful reminiscence was lost in 
the general break-up. G. 



CAUSE AND EFFECT. 

A fire on the premises of Dr. Port at Chollas Valley, near San Diego, Cal., 
destroyed a small bam or cow-shed, causing a damage of perhaps one hun- 
dred dollars. The fire occurred while the doctor was in town, and for some 
time its origin was a complete mystery. Determined to find out, if possible, 
how it occurred, Dr. Port on his return instituted an investigation, and ar- 
rived at results which makes the affair one of the most singular we have ever 
heard of. In the morning some brush had been burned some distance from 
the barn, and when the doctor left home the fire had ceased to burn— the 
biush being all consumed. Among the pets on the place is a fine young dog. 



64 



whose chief delight is to chase the numerous colony of rabbits (jacks and cot- 
tontails) abounding in the valley. Noticing the dog to be quite lame, Dr. P. 
proceeded to make a diagnosis of doggie as well as the fire, and found the 
dog's foot to be quite badly burned between the toes, which led the doctor to 
follow up his " lead M by which it was doubtless correctly determined that the 
dog had been in pursuit of a rabbit, whose flight had led him across the 
burned patch of brush. The fire was apparently all out, but the dog had 
stepped upon a small smouldering brand which became fastened between the 
toes. The sensation to the poor dog doubtless made him think he was the 
pursued instead of pursuer, and ** turning tail " he fled for home and jumped 
the fence into the small yard adjoining the barn. The yard being covered 
with loose hay, the brand became detached from the dog's foot in jumping 
the fence and fell among the hay, thus setting fire to the premises. 



HOW I KILLED MY MAN. 

I once killed a man. He was a perfect specimen of his kind; of him it may 
be said society met a long-felt want in his demise. 

He was short in stature; round, thick-set, swaithy; had broad shoulders 
and black bead-like eyes; to him a necktie was a useless appendage; summer 
and winter he appeared in shirt-sleeves; his eyebrows were bushy; his hair 
stood upright on his bullet head, "like quills upon the fretful porcupine;" 
his voice was a subdued roar — he spoke in thick gutturals, producing an effect 
not unlike solid extract of sound. I am in doubt as to his nationality; he ap- 
peared to combine traits of every known race, ? and his characteristics were of 
the four quarters of the globe. 

Not having killed a man before, my emotions were varied. This is how it 
happened: He kept a general merchandise store, and, like a prudent mer- 
chant, had policies with two companies, but, unlike a prudent merchant, 
when the fire occurred from causes to him unknown, he had made such an 
unequal distribution of coal oil about the premises, that the little room in 
the rear alone was damaged, while the tell-tale stock in the main store stared 
sullenly from the shelves, silent witnesses in the case. Before T reached the 
spot, the district agent of the other company had settled his loss, paid it, 
taken up his policy and departed, as a precautionary measure, telling the as- 
sured that the other policy contributed its full face value. 

Let me draw a veil — two veils— over the picture of my progress with this 
good man. How he did swear! Swear — he swore in seventeen languages- 
swore in all the inner keys, from baritone to double bass — swore to the top 
of the flag-staff on Mount Davidson and down to the lower level of the bot- 
tomless pit. When he had finished this volunteer crop of oaths, he swore 
judicially in the presence of a notary, Suffering truth, how he did swear! — 
swore that in this little 10x12 and 8 feet high was stored every variety of mer- 



65 



chandise, sewing machines, agricultural implements, hay, grain, feed, groce- 
ries, provisions, hardware, nuts, candy— everything! It, was the nuts and 
candy " broke the camel's back." An itemized statement footed up fifteen 
hundred weight of nuts, and a ton of candy, all in sticks. I stopped him 
right there. 

11 Hold on, friend," said I, " whatever happens, I do not want you to forget 
anything. Take plenty of time; talk it over calmly with your partner. True, 
he is not interested in this policy, but he can make suggestions. Come to 
town by and by and see your friends and the people from whom you buy 
goods. Get duplicate bills and statements of accounts, that will help you 
some. Don't forget the candy man; he can, no doubt, think of something 
not down on your list. Prices may be higher than when you laid in your 
winter's stock of nuts. You are entitled to every consideration in this mat- 
ter. Bring the nut merchant round to the office. I would not see a poor 
man ruined knowingly. Our instructions are to point out to the assured any 
loss he has suffered which may escape his eye in the excitement of the mo- 
ment." 

Thus I spoke with him ; thus I measured him, while his breast heaved with 
emotion and his eye burned fierce and fiercer. Suddenly, without warning, 
he went mad right there; he raved, foamed at the mouth, and bit at the air. 
It was a merciful Providence intervened and struck him to the floor, a sense- 
less lump of clay, They took him up, carried him out, and that week they 
buried him. It was the public administrator paid him this tribute; said he, 
" He was great — for one thing. He was the greatest liar in the world." G. 



Dear "Knapsack" — Open the inner pocket of your "old pack," and tuck 
this away for the next tea fight — if you want to. 

"CONSEQUENTIAL DAMAGE." 

The ideas of the great unwashed majority of the ' k plebeian herd " regarding 
the liability of insurance companies are as varied and vague as those of " a 
hog of a holiday," and happily illustrated in the recent experience of " one 
of us" in an adjoining county. 

Due notice of loss was received at headquarters, and one knight of the 3ds. 
Draft-Book hastened to the scene on his errand of mercy. The damage to 
building and furniture was found to be trifling, but the internal effects of 
mater familias were rent and disrupted as if by a volcanic eruption, and, 
though the smoke and ashes had drifted away, great distress still prevailed. 

Right here came in the question of " consequential damage." The loss to 
building and furniture had been amicably settled, and the adjuster was on 
the point of taking his departure, when the claimant brought him to the 
"right about " with a claim for damage through the premature tirth of his 
infant son William. To arrive at the measure of this damage was a puzzler 
for our adjuster, but, as we all would do, he fell resolutely to work, and first 



66 



satisfied himself that the damaged article had been properly covered and 
the thing was legitimate, and William would have been due thirty-one 
days from the date of the lire. Then arose the problem, what would be the 
present value of a Bill maturing at 31 days— interest, 9 per cent. But here 
he was startled to bethink himself that he was ignorant of the face of the 
Bill, and a sight of it was refused him. Still, always fertile in resources — 
like all of us, he took a horn of the dilemma, and, knowing the usual bill for 
such things — he started out with $50 as a basis. Then, turning to his "Tif- 
fany" for a proper table of depreciation, he concluded that "nut and bolt 
works with gravel roof V would be the correct guide. 

This question of depreciation is always vexatious and prolific of more 
trouble than any other in the line of our calling ; but, going quietly away by 
himself, our adjuster tackled it. Q. E. D. — If nut and bolt works will de- 
preciate 5 per cent, in a year, how much will it depreciate in 31 days, figuring 
from an inverse ratio? After laboring earnestly for some hours to bring the 
thing to a solution, and having " reached the base line/' he was surprised by 
the claimant suddenly exclaiming, "Look a-here, old man, you just pay the 
doctor's bill and I'll let you off." "How much is it?" asks the adjuster. 
" Ten dollars," says the claimant; and ten dollars was the compromise figure. 
Yours, ** 



And now, being of the opinion that we have got right down to the bottom 
of the thing — of the "Knapsack," I mean — the Manager and his Associate 
are ready to consider the inspection over and "fall in." Methinks we hear 
the merry tones emitted with jangling jar from the metal throat of the bugle, 
sounding the well-known "Dinner Call," and we sling knapsacks with alac- 
rity and are willing to go marching along for another season, 

President — Is Mr. Spencer, the Chairman of the Executive 
Committee, here ? 

Mr. Spencer — Yes, sir. 

President — Mr. Spencer, what has been done with regard to 
our banquet ? 

Mr. Spencer — I wish to state, about the banquet, that it will 
be held on Friday evening at 7 o'clock, at the Maison Dore. 
You will all receive rations in the shape of a tag for your accept- 
ance. 

President — How about invited guests ? 

Mr. Spencer — In regard to invited guests, if any of you have 



67 

friends, whom you desire to invite, if you will send your tags 
charged, we will have the proper invitations extended to them. 

President — Gentlemen, are there any committee reports? 

Secretary — Here is the report of Committee on Losses and 
Adjustments, which was laid over until this meeting, and proper^- 
ly comes up at this time, as unfinished business. 

President — Gentlemen, what is your pleasure with reference 
to that report? 

Secretary — For the benefit of members who were not present 
at the time the report was presented, I will say, the report is on 
the question of changing the per diem fees which now govern 
the members of the Association as to adjustments. 

On motion, the report went over to a special meeting, to be 
called by the President. 

President — Mr. Secretary, any other? 

Secretary — I have here a letter or note from George W. Hayes, 
Esq., Secretary of the Fire Under writers' Association of the 
Northwest, in which he says he has sent us a copy of the pro- 
ceedings of the twelfth annual meeting. It has not arrived yet. 
He also sends us a new form of combined survey and diagram, 
for the consideration of the Association, and any others that wish 
to look at it. 

President — If there are no objections, letter and survey will 
be placed on file. There being no other unfinished business, 
we will proceed to open under new business, and next in order 
is the election of officers for the ensuing year. 

Mr. Spencer — I wish to nominate for President Mr. George 
F. Grant. I think Mr. Grant has been a very efficient member 
of this Association from its start, and has taken a great interest 
in it, and it is simply duty to him to recognize his services. His 
contributions to the literature of the Association have always 
been appreciated by every one, and I think he will be a very 
efficient president. 



68 



Mr. Hunt — I take pleasure in seconding the nomination. 

Mr. Spencer — I move the Secretary cast the vote of the Asso- 
ciation for Mr. Grant. 

Carried, and the Secretary cast the affirmative vote of the As- 
sociation. 

President — Gentlemen, you have elected Mr. George F. Grant 
as my successor. I heartily second the remarks of Mr. Spencer, 
and there is no one to whom I would rather turn the office over 
than to Mr. Grant. 

President-elect Grant then took the Chair and remarked : 

Gentlemen — I thank you kindly for the honor that you have 
conferred upon me, for I consider it an honor to preside over 
the deliberations of the meetings held during the year, and this 
annual meeting; and, owing to the lateness of the hour, I will 
not attempt to make any speech to you, but I will say, that, 
with your assistance, it shall be my hope and endeavor to make 
the next annual meeting as interesting as this has been to you as 
well as to myself. They appear to increase in interest year by 
year. When this Association was born in a sleeping-car and 

reared in the dining-room of Mrs, at Virginia City, it 

was for the sole object of making a feeling of harmony and good- 
fellowship among the adjusters. In fact, everybody was an ad- 
juster at that time, for, although the presidents and vice-presi- 
dents and secretaries, and others, were there, they were there in 
the capacity of adjusters — every company being interested in a 
large amount, you will remember. 

The object of its starting has been attained. There is to-day 
a feeling of harmony and good-fellowship such as I do not be- 
lieve exists in the same number of men in one business any- 
where, and the work that is to be done now by this Association 
is work for the advancement and benefit of the business. I re- 
member at first that the officers, after the excitement of the time 
had passed — the presidents and officers of companies — felt that 
an association in a city no larger than this, would be, in a meas- 
ure, a rival of what was then known as the "Board of Under- 



69 



writers;" bat as time has gone on and several years have now 
passed, we ourselves have found, and they have seen, that this is 
neutral ground. Everybody can meet here — every man who 
settles a loss, or acts in the capacity of adjuster or of a field- 
hand, can meet here — and express his views in the presence of 
his principal, without fear of criticism, without fear that his mo- 
tive will be misunderstood. We are all, as it were, taking hold 
of hands and working for the general good of this business on 
this coast; and I hope that the hands wiH still be clasped, and 
we will continue to work together and develop that business un- 
til we arrive at that beautiful millenium, where there will be 
nothing else to gain. 

Mr. Bromwell — I take pleasure in nominating Mr. E. W. Car- 
penter for Vice-President of this Association. In making the 
nomination, I desire to say that I think there is no man in con- 
nection with the Association that has done more for it, that has 
been prompter, and whose contributions have been more studied 
and more elegant, I may say, than those of Mr. Carpenter. 

Mr. Potter — I second the nomination. 

President — Gentlemen, you heard the nomination. 

Mr. Spencer — I move the nomination be closed, and the vote 
cast by the Secretary for Mr. Carpenter. 

Motion put, carried, and Secretary cast the vote. 

President — I take pleasure in announcing that Mr. E. W. Car- 
penter is elected Vice-President. 

Mr. Garniss— I renew the nomination of Mr. J. W. Staples for 
Secretary, and move that Mr. Carpenter, the newly elected Vice- 
President, cast the vote. 

Mr. Staples — I hope that the nomination will not prevail. I 
feel that I cannot give the duties of Secretary the attention which 
they deserve, and trust you will nominate some one else who will 
give them the attention they require. 

Mr. Bromwell— There is a great deal of the detail work that 
Mr. Staples has followed from the organization of the Associa- 



70 



tion to the present time that a new man succeeding him would 
have to study all up. I do not think that a change in that place 
Would be beneficial to the Association. If we can prevail upon 
him — and I hope we can — to consent to take the office for an- 
other year, I will take pleasure in seconding the nomination of 
Mr. Garniss. 

Mr. Staples — The Secretary simply desires to say that his re- 
marks were prompted for the good of the Association. He will 
probably be absent during the greater portion of the year, and 
under those circumstances he felt that it was neither right or 
proper for him to accept the position. It is therefore for you to 
determine in the premises. 

Mr. Garniss — Mr. President, the Secretary can very readily 
turn over any duties to be performed to some one, which he has 
done heretofore, and is the habit in other societies. His effi- 
ciency has been of such a character, if his fear that he cannot do 
his duty is all that leads him to decline, I do not think we can 
excuse him. 

President — Those in favor will say, Aye. 

■ Mr. President, it was included that Mr. Carpenter should cast 
the vote. 

The motion was put, carried, and Mr. Carpenter cast the vote; 
whereupon Mr. J. W. Staples was declared re-elected for the 
seventh term. 

Mr. Bromwell-^I nominate Mr. Hunt as Chairman of the Ex- 
ecutive Committee. 

Mr. Hunt declined, and, on motion of Mr. Bromwell, Messrs. 
T. E. Pope, A. D. Smith and T. A. Mitchell, received the unani- 
mous vote of the Association, and the President declared them 
duly elected as the Executive Committee. 

Mr. Craig — I move a deposit of $50 be made to the credit of 
the Secretary for his services. 



71 

Seconded and carried. 

After a few remarks by members of the Association, upon mo- 
tion, adjourned. 



THE QUARTZ MILL HAZARD. 

A paper submitted by W. W. Hanscom to the Quarterly Meet- 
ing of the Fire Underwriters' Association of the Pacific, held 
November 17th, 1881: 

Mr. President and Gentlemen: 

In honoring me with an invitation to present to you a paper on quartz mills 
as a hazard in fire underwriting, I fear that I shall be unable to treat the 
subject so fully and completely as you requite and should expect, to be of in- 
terest and information such as the important nature of the subject demands, 
so that I shall at the beginning ask your kind indulgence for the missing links 
in this brief treatment of quartz mill hazards. 

To you who are writing quartz mills, the natural inquiry is, What are the 
natures of the various points which contribute to constitute the sum of haz- 
ards which shall determine the rate at which risks on quartz mills shall be 
written, and that the rate may neither be extortionate to the insured or a 
source of loss to the insurer? — in other words, a fair, just and equitable rate 
that may yield a fair profit to the underwriter. 

To me the hazard consists of two kinds: 

First, the natural, or that which is inherent to its occupancy and class 
which is itself divided into several grades, according to the general method or 
process employed in operating upon the ore. 

Second, the so-called moral; an unknown factor varying with the product- 
iveness of its use and the harmonious business relations of its owners. 

The first hazard may be divided somewhat as follows: 

GOLD MILLS USING ONLY SLUICES AND OPEKATED BY WATER-POWER. 

Gold mills as above, but operated by steam-power, and usually called steam- 
power quartz mill in contradistinction to water-power mills. 

Gold mills operated by steam-power, and using pans for grinding and amal- 
gamating. 

Silver mills operated by steam, aud crushing the ore wet, and using pans 
for grinding and amalgamating. 

Silver mills operated by steam, and crushing the ore dry, and which re- 
quire a drying-floor for expelling the excess of moisture from the ore before 
crushing, also using pans for grinding and amalgamation immediately after 
crushing; and 



72 



Silver mills, which crush the ore dry and then roast the ore in a roasting 
or desulphurizing furnace before grinding and amalgamating, also operated 
by steam-power. 

We may leave out of this paper the simple gold mill operated by water- 
power, as the rate which would be proper for a steam-power mill would be 
still more favorable for a mill operated by water-power. 

AS THE ESSENTIAL COMPONENT PARTS 

Of a quartz mill are composed of wood and iron, with the exception of the 
furnaces, which are connected with the drying-floor, roasting-furnaces and 
boiler-farnaces, and assay and retort-furnaces, it is well to understand what 
are the relations of the wood to iron, and also the general construction of the 
wood-work, and building of such wood-work as is used for support of the iron 
machiuery and the form and arrangement of the building so far as it may 
retard or assist its destruction when once on fire. 

Quartz mill buildings are, as a rule, constructed of a form most conducive 
to an entire destruction when once on fire, being nothing more than a large 
shell with the wood or lumber disposed in the most favorable shape for rapid 
combustion, and not subdivided in the interior into rooms, so that there is 
nothing to hinder but all conditions predisposed for a total destruction of the 
building when once on fire. The usual arrangement of quartz mill machinery 
prevents any isolation of its parts that are liable to serious damage by fire, 
consequently it may be safely assumed that all quartz mill buildings will be 
totally destroyed if once fairly on fire. By this I mean that any fire which 
occurs and is not put out in its incipiency, such as might be entirely quenched 
by a pail of water; for with all the appliances possessed by the majority of 
quartz mills and the facilities for the use of water, I do not know that the 
entire consumption of a building has been prevented, and no matter how well 
intentioned, prompt and energetic those who are employed about a mill, the 
combustion is so rapid that there is not time enough to effect such a purpose. 
This may be better understood when I state that less than 

THIRTY MINUTES WAS REQUIRED 

For the entire destruction of a mill building covering a space of ground one 
hundred and twenty by one hundred and fifty feet, and containing one-half a 
million feet of lumber in its construction, and this time is reduced to ten min- 
utes in the case of smaller mills and in dry localities. 

"What is true of the building is very nearly true of the wood-work which is 
used as frame-work and support for the iron machinery, and if this wood- 
work is not entirely destroyed, it has so far lost its identity and form that it is 
practically consumed, so that almost always the entire wood-work of the mill 
will, if insured, be paid for by the underwriters in case of a fire, as it may be 
taken for granted that whenever any fire is reported from a quartz mill it will 
prove to be utterly destroyed. So far as the wood-work is concerned, it is 
necessary to look for the conditions under which the mill takes fire, and to 



73 



use such precautions as will prevent those conditions from obtaining so far 
as can be done consistent with care and attention, according to the class of 
mill and the additional chances incurred from an increased amount of heat 
used around the mill. 

As in all steam-power mills, the boiler-furnace is common to all; that should 
have the first examination. 

First, the character of the fuel used, and in connection with this will be 
the influences of climate. With all fuel there will be some reduced to the 
state of dust in handling, no matter whether it is wood or coal, and the 

FUEL WHICH IS REDUCED TO A POWDER 

is one of the sources of danger from fire, for a simple experiment of dropping 
a small quantity of powdered wood upon the flame of a lamp, or upon a live 
coal, will demonstrate the rapidity with which finely divided vegetable mat- 
ter, as well as coal, will burn and communicate heat from one particle to an- 
other. In bringing the fuel from its pile adjacent to the furnace, more or less 
of this fine dust is scattered on the way and gradually carried to other places, 
and only waiting for some unintentional negligence to throw upon it some hot 
ashes, or a cigar-stump, or partly burned match, together with breeze of wind 
or gale, which often happens whenever these dust-piles catch fire, to create a 
demand on the insurance companies for an indemnity. Where the fuel is 
hard wood, and the climate not extremely hot or cold, and the locality not 
subject to strong gales of wind, the danger natural to wood as a fuel is least; 
but where brush is used, and the temperature is high, with a dry atmosphere, 
then the danger is greatest, especially as these localities seem to be the most 
liable to sudden and furious gales of wind. It is needless to more than call 
your attention to the circumstances, as you will at once perceive the necessity 
of a strict attention to the fuel hazard. 

THERE SHOULD BE BUT ONE CHANNEL 

for the escape of the products of combustion of the fuel, and that is from the 
furnace, around and through the boiler, and its exit at the top of the smoke- 
stack; therefore care should be exercised that there are no holes left open 
through brick or stonework surrounding the boiler, more especially if a 
damper is used in the stack, as in case of a temporary stoppage of the mill 
this may be shut, and even flame might be forced through any interstices, 
which there might be, either by inadvertence or by the natural action of heat 
upon walls of the furnace. Sometimes, with the damper in the stack shut 
and the ash-pit doors closed, there will be an accumulation of carbonic oxide, 
which, by opening the doors again, suddenly explodes and sends fire in vari- 
ous directions through the furnace-doors, if not doing damage of a serious 
character. 

These remarks will also apply to any furnaces used around a quartz mill. 



74 



IT IS NOT ALWAYS WELL TO USE WOOD 

as a support for the brick-work of furnaces, nor is it safe to use the brick- 
work of a furnace as a base or support for wood-work, as I have seen in some 
so-called first-class mills, and which, in one instance, cost the insurance com- 
pany probably nearly as much as the total premium receipts for a year of all 
the quartz mills insured in that State. 

A careful and positive examination should be made of all parts of a mill 
where wood is likely to be in contact with the brick or stone-work of a fur- 
nace, whether it be drying-boiler, roasting, assay or retort, and at the same 
time, of the fuel used, its place of storage and its tendency for powdering, 
and where ashes are put when taken from the furnace or ash-pit. 

These are the serious hazards of the furnaces, and necessarily should re- 
ceive the careful attention and experienced judgment of the surveyor and the 
supervising agent, who, it is presumed, inspects all special hazards in any 
risks accepted by his company. 

The lights should receive attention, particularly when the products of pe- 
troleum are used. The danger and hazard from the careless use of coal-oil 
are so well known that it is hardly necessary to more than call attention to 
them, so that they might not be overlooked during the inspection, which is 
usually made in the daytime. And here it is proper to state that a personal 
experience warrants the assertion that a proper inspection and supervision of 

QUARTZ MILL RISKS IN CALIFORNIA AND NEVADA 

would have saved the insurance companies not less than 75 per cent, of the 
amount which they have paid in the last eight years as indemnity for damage 
by fire to quartz mills. 

How far this would affect the profit or loss in insuring quartz mills, and 
what advantages there may be to offset this loss in money, is a matter for the 
companies to determine. 

Although it has been stated that quartz mills are generally destroyed, or 
rather that all the wood-work is consumed, if a mill has once fairly got on 
fire, it is not to be presumed that water facilities are of no value and are a 
useless expense. On the contrary, it is an important study in the construc- 
tion of mills to have the most perfect arrangement of water-pipes, hose and 
other appliances, that the situation and means will allow. Not all in the 
mill, so that as soon as a fire occurs all access to them is cut off; but arranged 
without the mill as well, so that water may be used in the shortest possible 
time. Pumps and cocks should not be placed in some out-of-the-way corner, 
where they will not only not take up valuable space in the engine or fire-room, 
but be practically inaccessible in '-ase of sudden need. Let them be placed 
so that it is no trouble to get at them, and in dry weather wet down around 
where fuel is used, and where dust from fuel accumulates. The rule of clean- 
liness is just as applicable to quartz mills as to man, for about a mill, where 
care is taken to keep the mill clean, it engenders care as to such points as are 
likely otherwise to be sources of danger from fire. 



75 



THE MORAL HAZARD, 

which may include depreciation from age as well as business and profitable 
operation, is that which is liable to occur during limited periods of time, and 
necessarily requires a more frequent inspection than perhaps any other class 
of machinery or manufacturing risk. 

Of course this entails an additional expense to the underwriters, which must 
be borne by such a sum as the rates can carry. Perhaps no kind of machin- 
ery, when once erected and in operation, can less afford removal than that of 
quartz mills, from the fact that it is most always transported by the most 
expensive method, and generally erected where a large yield is required to 
make it profitable, and when once the profit ceases it cannot be sold but for a 
small fraction of its original cost. However well it may be constructed and 
kept in order, it is comparatively useless except for the particular mine or 
mines whose ores are to be worked by it. 

It would be presumption on my part to say further on this point, for if 
there is one point in the science of underwriting which is more thoroughly 
understood and appreciated by insurance companies more than all others, it 
is the moral hazard. 

It has been stated that the insuring of quartz mills on this coast has not 
been profitable to the insurers. In view of the experience obtained by under- 
writers at great cost to them, has there not been too much of the " trust to 
luck " in this portion of fire insurance business? In conclusion, I beg leave 
to suggest that the sagacious gentlemen who are supposed to be not only busi- 
ness men, but manufacturers, carpenters, machinists, lawyers, as well as thor- 
ough students of human nature, whose work never ends and whose patience 
never tires, and upon whose shoulders the real insurance interests of the 
eountry rests, the "specials " devise a plan whereby the experiment may be 
tried of semi-annual inspection of quartz mill risks, to the end that the infor- 
mation may be obtained before, which now comes after, a fire. 



COAL OIL IN STORES. 

A paper on the subject of coal oil in stores, by J. A. Brumsey, 
of Virginia City, Nevada, and read by Secretary Staples at the 
Quarterly Meeting of the Underwriters' Association of the Pacific, 
November 15th, 1881. 

Virginia City, Nev., November 6, 1881. 
Fire Underwriters' Association of the Pacific: 

Gentlemen — The question of coal oil in stores has given me much concern. 
First, because in my judgment the Board rules are unfair to the retail dealer; 
second, because Board rules and policy conditions are not in harmony, and 



76 



are constantly ignored by the assured; and third, because I am in the very 
unpleasant predicament of doubt as to the attitude of the companies in case 
of loss. 

There is no ordinance in Virginia City regulating the keeping or storing of 
coal oil, and the principal grocers buy oil by the car-load, and keep from 20 
to 300 cases in their stores. 

There are probably a dozen merchants violating the principal conditions of 
their policies at this time, and few have any written permit to keep oil. 
Your Board allows 200 gallons, but some policies permit none at all. We 
cannot compel merchants to store oil outside of fire limits, and they decline 
to pay the Board extra oil rate (which progresses in an arithmetical ratio), 
asserting that it is unreasonable. It is true we can decline the risks, but be- 
fore doing so is it not well to determine the fairness of the rate as adjusted. 
The special Board rate on a B class oil store in Virginia City is 3% per cent. 
Lucine and the lighter earth oils are retailed there without extra rate. A 
grocery stock in a similar building is specially rated at 3 per cent. No. 4 
rate would be not more than $1.75. 

The grocer gets in a car load of oil, and is taxed ten cents per hundred for 
2,600 gallons, or $2.60 extra, making his rate 5.60, when if he insured as an 
oil store, under special rating, he would pay 3% per cent. Under No. 4, 
adding 40 per cent., he would pay 3.15. 

It is a fact which must be known to all agents, that excessive quantities of 
oil are kept here, and I am not sure that this knowledge would not work a 
waiver in case of loss, and would call your attention to a few cases where un- 
communicated knowledge of agent was deemed sufficient. Masters vs. Madi- 
son, New York Supreme Court, 3 Bennett, 398. 

If, however, the application be taken by an agent of the company, and he 
is aware of facts material to the risk, but which are not set forth in the appli- 
cation, the company will be charged with knowledge, and under such circum- 
stances an unintentional concealment or misrepresentation will not make void 
the policy. Marshall vs. Columbian Mutual Fire Ins. Co., Superior Court, 
New Hampshire, 3 Bennett, 634. 

When premises, insured against loss by fire, have been thoroughly exam- 
ined by the agent of the insurers, it is conclusive upon the insurers as to 
whatsoever is apparent. Michall vs. Mutual Ins. Co., Superior Court, Louis- 
iana, 4 Bennett, 29. 

The knowldgo of an agent of the existence of a material fact not stated by 
the applicant; held to be the knowledge of the insurance company in a case 
where there was no fraudulent concealment of the fact. Campbell vs. Mer- 
chants' Mutual Ins. Co., New Hampshire, 4 Bennett, 288. 

When the agent knew the condition of the building, and allowed the policy 
to remain uncanceled, it is too late after the loss to allege that the risk was 
rendered more hazardous. Fireman's Fund Ins. Co. vs. Congregation R. S., 
Superior Court, Illinois, 5 Law Journal, 489. 

Held, that the condition may be waived by the insurer, by express words or 
by acts done under such circumstances as would impute a fraudulent purpose, 



77 

and as will estop him from setting up the condition against the insured. 
Held, that it must be presumed the intention of the parties to make a valid 
contract, and by issuing the policy with a knowledge of the facts the company 
is estopped from setting up the condition. Held, that the agent was acquaint- 
ed with the fact. Van Shaick vs. Niagara Ins. Co., Court of Appeals, N. Y., 
6 Law Journal, 195. 

The agent inspected the premises. Held, that the knowledge of the agent 
was a waiver of the required consent. Bennett vs. North British & Mercan- 
tile Ins. Co., Court of Appeals, N. Y., 9 Law Journal, 585. 

Proof that the agent of the insurer had knowledge of the true state and 
condition of the premises, is a complete answer to alleged false and fraudu- 
lent representation. 

See also, Flanders, pages 210, 220 and 221. 

In the foregoing cases the agent knew of the circumstances in conflict with 
the conditions of the policies, and such knowledge was not cQn.municated by 
the assured. If the assured had called the attention of the agent to the cir- 
cumstances, the cases would have been stronger against the companies. 

Many of the policies here are written to cover "groceries and other mer- 
chandise," and "merchandise such as is usually kept for sale in a grocery 
store." Do not such forms cover all merchandise usually kept in the local- 
ity? 

Questions of doubt between the printed and written portions of the policy 
give way to the latter. 

It cannot be a question that coal oil is merchandise usual to this locality, 
nor that the agents all know that their grocery policy-holders keep more of 
that merchandise than the printed policy permits, "and it must be presumed 
the intention of the parties to make a valid contract." 

The courts liberally construe the presumed authority of agents, and juries 
surpass in liberality the instructions of the courts. 

I am in favor of honest, open-handed business, free from subterfuge and 
deception, and believe that the companies, as well as the agents, should know 
the condition of the coal oil question here. 

I imagine it is the same in many places on the Pacifie coast. I do not be- 
lieve the rate fairly and equitably adjusted, respecting the interests of retail 
dealers, but whether fair or not, it is shaped in uncertainty, aud may produce 
unfortunate complications, which every honest underwriter earnestly desires 
to avoid. 

I am in favor of adjusting the insurance so that the loss will adjust itself. 
Yours, very truly, 

J. A. BRUMSEY. 



78 



LIST OF OFFICERS FOR 1882. 



GEORGE F. GRANT President. 

E. W. CARPENTER Vice-President. 

J. W. STAPLES Secretary and Treasurer. 

Executive Committee. 
T. E. Pope, A. D. Smith, T. A. Mitchell. 

Standing Committees. 

LOCAL AGENTS. 

T. E. Pope, S. E. Strickland, L. B. Edwards. 

FORMS OF POLICIES. 

W. L. Chalmers, Geo. W. Dornin, C. P. Farnfield. 

LOSSES AND ADJUSTMENTS. 

Z. P. Clark, H. A. Craig, Louis Mel. 

LESISLATION AND TAXATION. 

T. A. Mitchell, Jno. C. Staples, W. P. Thomas. 

FIRE DEPARTMENT AND WATER SUPPLY. 

Wm. Sexton, C. M. Nichols, Ed. Farnsworth. 

STATISTICS. 

O. H. Cole, W. J. Dutton, J. D. Bailey. 

LIBRARY. 

Geo. W. Spencer, S. 0. Hunt, J. W. Staples. 

CALIFORNIA KNAPSACK. 

C. Mason Kinne, Editor. 



79 



LIST OF MEMBERS. 



L. L. Bromwell, Vice-President, California Insurance Company. 

Geo. F. Grant, Special Agent and Adjuster. North British & Mercantile & 
German-American Insurance Companies. 

Z. P. Clark, General Agent, Commercial Union Assurance Co. 

Wm. Sexton, Assistant Manager, Lion Fire Insurance Company. 

A. D. Smith, General Agent, Amazon, Northwestern and Manhattan Fire In- 
surance Companies. 

Geo. W. Spencer, Manager, London & Lancashire, Manchester, Continental 
aud Niagara Insurance Companies. 

J. W. Staples, Special Agent and Adjuster, London and Lancashire, Man- 
chester, Continental and Niagara Insurance Companies. 

E. Brown, General Agent, Phenix, Star and other Insurance Companies. 

A. J. Bryant, President, State Investment and Insurance Company. 

J. R Garniss, Fire Ins. Adjuster and General Agent, Fidelity & Casuality Co. 

J. D. Bailey, Secretary, Union Insurance Company. 

A. R. Gunnison, Special Agent and Adjuster, Commercial Insurance Com- 
pany. 

Robert Dickson, Manager, Imperial, London, Northern and Queen Insurance 
Companies. 

Geo. D. Dornin, Manager, Lion Fire Insurance Company. 

*Henry Smith, Special Agent and Adjuster, Liverpool & London & Globe 
Insurance Company. 

H. W. Snow, General Agent, American Central, Metropole and Reassurances 
Generales Insurance Companies. 

W. J. Landers, General Agent, Guardian Assurance Company. 

E. E. Potter, Secretary and Treasurer, Sun Ins. Co. of Cal., and General 
Agent, Boston Underwriters and Williamsburg City Ins. Cos. 

J. F. Houghton, President, Home Mutual Insurance Company. 

W. J. Callingham, General Agent, South British and National and City of 
London Insurance Companies. 

tD. L. Kirby, Associate Manager, Royal Canadian Insurance Company. 

tW. W. Dudley, Illinois State Agent, German-American Insurance Company. 

Wm. MacDonald, General Agent, Connecticut and Scottish Union & National 
Insurance Companies. 

C. T. Hopkins, President, California Insurance Company. 

W. L. Chalmers, Special Agent and Adjuster, Hutchinson & Mann's Agency. 

J. R. Hamilton, General Agent, Commercial Union Assurance Company. 

T. C. Grant, General Agent, North British & Mercantile and German-Ameri- 
can Insurance Companies. 



80 



Chas. H. Cushing, Secretary, State Investment and Insurance Company. 

*W. J. Stoddard, Agent, New York Underwriters' Agency, etc. 

A. P. Flint, Manager, Hartford Fire Insurance Company. 

H. R. Mann, Agent, Hutchinson & Mann's Agency. 

Julius Jacobs, Agent, Jacobs & Easton Agency. 

Geo. Easton, Agent, Jacobs & Easton Agency. 

tJas. Kip, formerly of the London Assurance Company. 

Samuel D. Mayer, City Agent, Commercial Union Assurance Company. 

Dave Rorick, Perry, Jefferson Co., Kansas. 

C. P. Ferry, Inspector of Agencies and Adjuster, Portland, Oregon. 
tE. E. Ryan, Agency, 110 La Salle St., Chicago, 111. 

Oliver Hawes, General Agent, Connecticut Fire and Scottish Union and 

National Insurance Companies. 
S. O. Hunt, Agent, Jonathan Hunt, Son & Co.'s Agency. 

D. J. Staples, President, Fireman's Fund Insurance Company. 

Wm. Frank, General Agent, Hamburg-Magdeburg Fire and City Agent Lion 
Fire Insurance Companies. 

*Henry Balzer, Agent, Svea, North German, and Helvetia Insurance Com- 
panies. 

L. Beck, City Agent, New Zealand Insurance Company. 

C. M. Nichols, Surveyor of the Board of Fire Underwriters. 

O. H. Cole, Adjuster. 

T. A. Mitchell, Agent, Jonathan Hunt, Son & Co.'s Agency. 

F. F. Stone, Agent, Insurance Companies. 

C. Mason Kinne, Special Agent and Adjuster, Liverpool & London & Globe 
Insurance Company. 

J. C. Jennings, General Agent, Manufacturers' and Lorillard Insurance Com- 
panies. 

Geo. E. Butler, General Agent, S. F. Agency Phoenix Assurance Company of 
London, British America, and Western Assurance Companies of 
Canada. 

Chas. D. Haven, Resident Secretary Liverpool & London & Globe Insurance 
Company. 

E. W. Carpenter, Assistant Secretary Fireman's Fund Insurance Company, 
t W. N. Olmsted, 62 Cedar St., Room 10, New York City. 

Geo. W. Doinin, with Lion Fire Insurance Company. 

W. P. Thomas, Special Agent and Adjuster, South British and National In- 
surance and City of London Companies. 

Louis MeJ, Special Agent and Adjuster, Royal, Norwich, Union, and Lan- 
cashire Insurance Companies. 

J. P. Cox, with Hutchinson & Mann's Agency. 

tJ. G. Edwards, Editor Coast Review, 320 Sansome St., San Francisco. 

t A. Hill Jack, General Manager, National Fire & Marine Insurance Company 
of New Zealand. 

R. H. Naunton, Manager, Scottish Imperial Ins. Co. 

Jno. C. Staples, Special Agent and Adjuster, Firemans Fund Ins. Co. 



81 



T. E. Pope, Special Agent and Adjuster, iEtna Insurance Company. 

S. E. Strickland, Special^Agent and Adjuster, Butler & Haldan Agency. 

S. B. Riggen, Special Agent and Adjuster, California Insurance Company. 

Alfred Stillman, General Agent, Manufacturers and Lorillard Fire Insurance 
Companies, New York. 

W. G Elliott, General Agent, Commercial Fire, United Fireman's and Alle- 
mania Insurance Companies. 

Rudolph Herrold, Surveyor, Hamburg-Bremen and other Insurance Com- 
panies. 

Thos W. Fenn, Special Agent and Adjuster, Jacobs & Easton Agency. 

Chas. P. Farnfield, General Agent. Union Ins. Co., San Francisco. 

L. B. Edwards, General Agent, Oakland Home Ins. Co. 

Homer A. Craig, General Agent, Brown, Craig & Co. 

William J. Button, Secretary, Firemans Fund Ins. Co. 

Edward Farnsworth, General Agent, Farnsworth & Son. 

*Deceased. tHonorary Member. 



PR0COTING3 



OF THE 



Seventh Annual Meeting 



OF THE 



H 



IRE UNDERWRITERS 1 



SSSOCISTION OF THE PACIFIC, 




SM FRMCISCO, FEBRUARY 20 AND 21, 1883. 



PRINTED BY ORDER OF THE ASSOCIATION. 

1883. 



H. S. Crocker & Co., 
San Francisco. 



TABLE OF COISFTE^TS. 



Officers and Committees ....... 

Programme of Exercises ...... 

Roll Call 

New Members-Elect ....... 

Correspondence ........ 

Report of J. W. Staples, Secretary ...... 

Adddress of Geo. F. Grant, President . . 

Resolution of Thanks to President ...... 

" Local Agents," T. E . Pope ...... 

" Forms of Policies," W. L. Chalmers ..... 

"Losses and Adjustments," Z. P. Clark .... 

"Legislation and Taxation," T. A. Mitchell .... 

" Co-operation," C. C. Hine ....... 

Resolution of Thanks to C. C. Hine ..... 

" California Knapsack " ....... 

"The Peril of Using Benzine in Canning Establishments," W. J. Landers 
" Statistics," O. H. Cole . . . . . . 

Report on Library, Geo. W. Spencer ..... 

Presentation of Books, E. W. Caspenter . . . 

Resolution of Thanks to D. J. Staples ..... 

" Fire Department and Water Supply," Wm. Sexton 

Discussion ......... 

Remarks of Tom C. Grant ....... 

Remarks of E. Brown ....... 

Remarks of Geo. D. Dornin ...... 

" Suggestions upon the Insurance Contract," by T. C. Van Ness 
Resolution of Thanks to T. C. Van Ness .... 

" Underwriting from a Local Agent's Point of View," W. J. Brodrick 
Election of W. J. Brodrick ...... 

Remarks of E. E. Potter ....... 

11 Science and Underwriting; or, Microscop c Hazards," C. Mason Kinne 
" Machinery," E. W. Carpenter ..... 

A. R. Gunnison's Paper ....... 

"Apportionment of Loss under Non-Concurrent Policie-," Wm. Sexton 
Discussion on Sexton Rule . . . . . 

Election of Officers ...... 

Resolution of Thanks to J. W. Staples, Secretary 

Remarks of J. W. Staples . . 

List of Members . ....... 

List of Officers and Committees for 1833-4 .... 



Page. 
5 

6 



8 

9 

. 10-15 

1G 

17-19 

20-22 

23-26 

27-30 

31-38 

39 

40-52 

53-56 

57-60 

61-62 

62 

63 

64-70 

71-77 

72-73 

74 

75 

78-81 

82 

83-84 

84 

85-86 

87-89 

90-97 

98-99 

100-104 

105 

107-118 

109 

109 

110-112 

113 



Seventh Annual Meeting 



FIEE UNDERWRITERS 1 ASSOCIATION 

OF THE PACIFIC. 



LIST OF OFFICERS FOR 



GEORGE F. GRANT, 
E. W. CARPENTER, 
J. W. STAPLES, 



1882-3. 

President. 

Vice-President. 

Secretary and Treasurer. 



EXECUTIVE COMMITTEE. • 
A. D. Smith, 

STANDING COMMITTEES. 

Local Agents. 

S. E. Strickland, 

Forms of Policies. 
Geo. W. Dornin, 

Losses and Adjustments. 
H. A. Craig, 

Legislation and Taxation. 
Jno. C. Staples, 

Fire Department and Water Supply. 
C. M. Nichols, 

Statistics. 

W. J. DUTTON, 

Library. 
S. 0. Hunt, 

California Knapsack. 
C. Mason Kinne, Editor. 



SPECIAL COMMITTEE. 
Apportionment of Loss Under Non-concurrent Policies. 
E. W. Carpenter, (J. Mason Kinne, J. R. Garniss, 

Wm. Sexton, 0. EI. Cole. 



T. E. Pope, 

T. E. Pope, 

W. L. Chalmers, 

Z. P. Clark^ 

T. A. Mitchell, 

Wm. Sexton, 

0. H. Cole, 

Geo. W. Spencer, 



T. A. Mitchell. 



L. B. Edwards. 



C. P. Farnfield. 



Louis Mel. 



W. P. Thomas. 



Ed. Farnsworth. 



J. D. Bailey. 



J. W. Staples. 



PROGRAMME. 

ANNUAL REPORT, J. W. Staples. 

ANNUAL ADDRESS, Geo. F. Grant. 

LOCAL AGENTS, T.E.Pope. 

FORMS OF POLICIES, - - W. L. Chalmers. 

LOSSES AND ADJUSTMENTS, - - - Z. P. Clark. 

LEGISLATION AND TAXATION, - T. A. Mitchell. 

CO-OPERATION, - - C. C. Hine, Editor "Ins. Monitor." 

"CALIFORNIA KNAPSACK," - - C. Mason Kinne, Editor. 

FIRE DEPARTMENT AND WATER SUPPLY, - - Wm. Sexton. 

THE PERIL OF USING BENZINE IN CANNING ESTABLISMENTS, 

W, J. Landers. 
STATISTICS, - - : - - 0. H. COLE. 

LIBRARY, Geo. W. Spencer, 

SUGGESTIONS UPON THE INS. CONTRACT, 

T. C. Yan Ness, Attorney at Law. 
UNDERWRITING,- FROM A LOCAL AGENTS POINT OF YIEW, 

W. J. Brodrick, Los Angeles. 
SCIENCE AND UNDERWRITING, OR MICROSCOPIC HAZARDS, 

C. Mason Kinne. 
MACHINERY, : E. W. Carpenter. 

DANGER OF OVER-INSURANCE, - - - A. R. Gunnison. 

APPPORTIONMENT OF LOSS UNDER NON-CONCURRENT POLICIES, 

Wm. Sexton, of the Committee. 
NEW BUSINESS. 

ELECTION OF OFFICERS. 



PROCEEDINGS 



OF THE 



Seventh Annual Meeting of The Fire Undemvriters Association 

of the Pacific, held at their rooms, 216 Sansome Street, 

San Franeisco, Gal., February 20th and 21st, 18 S3. 



OPENING SESSION, 



San Francisco, February 20, 1883. 

The seventh annual meeting of the Fire Underwriters' Asso- 
ciation of the Pacific was called to order at 10:30 A. M. 

President Geo. F. Grant, special agent of the North British 
and Mercantile and the German- American Insurance Companies, 
in the Chair, and J. W. Staples, special agent for Messrs. Balfour, 
Guthrie & Co's Agencies, Secretary. 

The roll called by the Secretary shows the following-named 
members present : — 



L. L. Bromwell, 
G. F. Grant, 
Wm. Sexton, 
A. D. Smith, 
Geo. W. Spencer, 
J. W. Staples, 
E. Brown, 
J. D. Bailey, 
Geo. J). Dornin, 
H. W. Snow, 
W. J. Landers, 
E. E. Potter, 
J. F. Houghton, 
W. J. Callingham, 
W. Macdonald, 
C. T. Hopkins, 



W. L. Chalmers, 
Tom C. Grant, 

C. H. Cushing, 
A. P. Flint, 
Julius Jacobs, 
Oliver Hawes, 
S. 0. Hunt, 

D. J. Staples, 
Wm. Frank, 
C. M. Nichols, 
T. A. Mitchell, 
C. Mason Kinne, 
G. E. Butler, 

C. D. Haven, 

E. W. Carpenter, 
Geo. W. Dornin, 



J. G. Edwards, 
R. H. Naunton, 
T. E. Pope, 
W. G. Elliott, 
R. Herold, 
L. B. Edwards, 
H. A. Craig, 
W. J. Dutton, 
Ed. Farnsworth, 
H. K. Belden, 
B. Faymonville, 
S. D. Ives, 
Fred T. Hoyt, 
F. N. Berry, 
D. B. Wilson, 
A. C. Donnell. 



8 SEVENTH ANNUAL MEETING, 

On motion, the reading of the minutes of previous meeting 
was dispensed with. 

The following names were submitted for membership, and 
elected, during the session : — 

George F. Ashton, Special Agent. B. B. Wilson, Special Agent. 

Fulton M. Berry, " " E. A. Halsey, 

A. R. Gurry, " " J. C. Ragsdale, " 

Otho N.Hall, " " 0. B. McHenry, " 

The Secretary read a letter from W. B. Cornell, Esq., President 
of the Fire Underwriters' Association of the Northwest, as fol- 
lows : — 

Chicago, III., December 19, 1882. 
Geo. F. Grant, President, San Francisco, CaL, 

Dear Sir: — Your kind favor of the 12th inst. duly received. Touching a paper 
for that February meeting, I do not know about it, and can only say that it will 
depend a great deal on how matters run in January. If January is as hot as it 
is in December, about the only paper I would be able to prepare would be to Jill 
out a loss report and send to the Association. The amount of loss would be the 
absence of the value, if any there would be, to my paper. I will help you if I 
can, — rest assured of that. With kind regards, I remain yours truly, 

W. B. CORNELL. 

This was followed by letters of regret from members Clark, 
Thomas, Cole and Gunnison. 

Secretary J. W. Staples then read the following annual 
report : — 

SECRETARY'S REPORT. 

Mr. President and Gentlemen of the Fire Underwriters' Association of 

the Pacific : — 

On the 23d day of February, 1876, seven years ago, some fourteen adjusters 
assembled in the old Board rooms over the Union Insurance Company's office, for 
the purpose of organizing "The Fire Underwriters' Association of the 
Pacific," our worthy President forming one of the number; and in the list we 
find the familiar names of Spencer, Sexton, Bromwell, A. D. Smith, Clark and 
Lowe ; Magill, Bigelow, Hart, Doolan, Dick and Barnes, who since have ceased to 
membership. 

The foregoing list was soon swelled by our friends Brown, Garniss, Maedonald, 
Callingham, Landers, Dickson, Gunnison, Bryant, Potter, Bailey, Snow, Dornin, 
Sr., Houghton, and last, but not least, " Harry Smith." All except Harry Smith 
belonged to the Adjusters' Association at Virginia City the fall before. 

Those of you who formed a part of that assemblage on the nights and days 
of October and November, 1875, will remember the stirring, active times that 
brought so many together. 



SECRETARY'S REPORT. 9 

The variety of claimants, — those whose claims were fair at a glance ; those 
whose claims had been manufactured by the furniture men ; those who had lost 
all and to whom the insurance money was a God- send, and others to whom it was 
a bagatelle ; the many incidents attendant upon the settlement of so many losses ; 
the wading in snow and slush to our quarters on dark nights, and many other 
features will, to many, never be forgotten. 

Our ranks have steadily increased until we can show a total of ninety-one as 
having joined the Association. The casualties have been, — three deceased, nine 
resigned, and nine dropped from the roll, leaving our present membership seventy 
active members, with seven honorary members. 

The membership being classified shows : Thirty-three General Agents and 
Managers, seventeen Special Agents and Adjusters, eight City Agents, seven 
Secretaries, four Presidents, and one Surveyor of the Board. 

The first President of the Association was Mr. B. F. Lowe (now in New York), 
with Mr. H. H. Bigelow as Vice-President, and myself as Secretary. 

The Association, when formed, was to have one regular meeting each month, 
and was conducted on that basis for five years. In the first, second and third 
years (1876, 1877 and 1878) failing only once in each year to have the required 
number of meetings, and on each occasion was the result of absence of so many 
of the members that no quorum was obtained. 

On the fourth year three meetings were missed, and on the fifth year six meet- 
ings — in nearly every case for the reason above noted. It was then thought best 
to try the meetings once in three months ; and on the 18th of May the Constitution 
was amended to read : ' ' The annual meeting shall be held on the third Tuesday 
in February of each year. The regular meetings shall be held on the third 
Tuesdays in May, August and November of each year." This plan of holding 
meetings quarterly has been in operation two years. During the year 1881 four 
meetings were held, and during 1882 one was missed. The Secretary was away 
from home, and, having left no word with the Executive Committee, the meeting 
was not called. 

The result of the two systems is before you, and each seem to have their 
redeeming qualities. The monthly system of meetings has the feature of bringing 
together the members more frequently ; and many questions would be submitted 
for discussion, the freshness of which has passed before the quarterly meeting 
arrives. Again, the life of the Special is one of activity — seldom home for many 
days at a time — and with the meetings monthly the chances are more favorable 
for being home on the occasion of some of the meetings during the year. I am 
in favor of the meetings monthly, and would like to see the Constitution amended 
to conform thereto. 

A very interesting portion of the Association's 'proceedings in days gone by 
was the discussion of "some topic connected with the fire insurance business," at a 
regular meeting. This subject was introduced by Mr. Hopkins, who was the 
President of the Association at the meeting held May 20th, 1879, and was 
adopted, and was productive of good while it lasted. The subjects were treated 
well by the essayists, and during the discussion following many points were 
developed which, if they could have been taken down by a short-hand reporter, 
would have formed valuable stores for reference. The presentation of a subject 
by some essayist was finally abandoned, by reason of the member failing to 



10 SEVENTH ANNUAL MEETING. 

respond, and the subject has been a dead letter on our books until the present. 
Could not this plan or one embracing the main features be revived, so that a 
greater interest might be felt in our meetings. 

The Library and other interesting subjects will be doubtless fully presented by 
the several committees having the subjects in keeping ; and I will not trench upon 
their preserves. 

With this meeting closes my connection as Secretary of the Association ; and I 
desire to thank you, one and all, for your uniform courtesy to me during the 
many years which I have been associated with you. I shall doubtless miss the 
work incident to the position, but gladly turn it over to my successor, only 
hoping that he will labor as hard as I have done to advance the interests of the 
Association. I am, gentlemen, 

Yours very truly, 

San Francisco, January 30th, 1883. J. W. STAPLES, Secretary. 

The President : Gentlemen, you have heard the Secretary's 
report; there being no objection it stands approved as read. 
Other papers will be read in the order of the programme. It 
is hoped when points of interest are touched discussion will 
follow. 

The Vice-President, Mr. E. W. Carpenter, takes the chair; and 
the President reads his Annual Address : — 

ADDRESS OF PRESIDENT GEORGE F. GRANT. 

Gentlemen of the Underwriters' Association of the Pacific : — In response 
to the demand of this Association upon its presiding officer, I now address you. 

Even as " there is nothing new under the sun," so there is nothing new to 
offer in an annual address. 

Each year some one of us puts his stamp upon an arrangement of facts and 
figures, furnishing for you such a recapitulation as ingenuity and originality can 
devise. 

For my own attempt I ask your kind indulgence, — my paper seeks to portray 
phases incident to the business of fire underwriting, quite as real, if less palatable, 
than those presented by my predecessors. 

Having invited chairmen of committees, and others, to write on such sub- 
jects as local agents, forms of policy, losses, adjustments, over-insurance, the 
legal aspect of the contract, statistics, fire department, our library, and other 
topics, it would not be generous to forestall these gentlemen by producing an array 
of good points selected from their themes. 

I beg you to remember that this address is for your entertainment ; and if you 
are told that ice is warm, or snow is black, do not accept the theory without 
investigation. 

Death, ever busy in the ranks of men, has passed us by these last twelve 
months — our roll call shows all present or accounted for. 

Interest in the work of the Association has steadily increased. We are now 
firmly established and self-sustaining, w^hich means that harmony and good 



PRESIDENTS ADDRESS. 11 

practice has been promoted. Members have the courage of their convictions. 
Free discussion without personality marks our meetings and follows us in our 
daily business relations. The year 1882 was a disastrous one on this Coast — 
losses occurred continually from January to December. The tendency of rates 
meantime has been downward, — irresistibly downward. This is partly owing to 
the action of certain underwriters from the "East," who appear to regard us as 
objects, less of interest than of curiosity, and who do not hesitate to cheapen our 
market. These good men, eager with greed of gain, have conspired to break 
down and tear open our best laid plans for a friendly rivalry in business among 
ourselves. 

It is doubtful if ever in the history of Pacific Coast underwriting such stren- 
uous efforts have been made by individuals — each according to his idea of business 
— to increase premium receipts, as during the last twelve months. 

The business of conducting fire insurance is a perpetual grind : it is WORK, 
pure and simple; it is mental and physical toil, without a halting place or a 
breathing spell. It is a treadmill upon which one may walk a life-time without 
getting off. There is no end — but death! It is a business which deals with 
total destruction. It brings happiness to no honest person, and affords relief 
only in the presence of disaster. As a speculation, it is as uncertain as life ; and 
the more profitable to the speculating shareholder, the less likely the company to 
survive a terrible conflagration. 

In spite of this dismal picture, it is a business which commands the respect 
and attention of the mercantile world ; without it the system of credit in trade 
would be well nigh impossible. Cancel every policy in force to-day, and cease 
underwriting, and a panic would result the length and breadth of the land. 

The insurance business contains some of the brightest minds, the highest order 
of cultivation, the best business capacity possible. 

It is a business depending for its success upon system. Yet there are as many 
systems as there are thinking managers. In times of peace, when fires are few 
and losses light, working plans are made and followed wholly inadequate to meet 
the season of inevitable disaster. Rigid " blue laws," such as followed after the 
destruction of Chicago and Boston, came to grief when the scare was over. 
Between these two extremes there must be a safe profitable medium, but who 
shall decide when it is reached? Who will accept the decision when rendered ? 
Underwriters are as alike in their views on common-sense propositions as drops of 
water in a drinking glass ; and carrying the simile farther, — when scattered, 
each drop will find its level and roll off by itself ; there is no force of attraction 
in the greater bulk to recall the wandering drop. 

J ust why it is impossible for insurance men to agree may be a question for 
scientific investigation. I groan, in spirit, when I think of it. Nevertheless, on 
this Coast, with pluck and energy, underwriters have for years maintained rules 
such as other communities have been unable to follow. In an address of this 
kind the word "underwriter " occurs continually. And what is an underwriter ? 
Custom has made this word so familiar to the ear that we divine its meaning 
without attempt at analysis, as the school-boy knows that two and two make 
four from having known it always. Underwriters were so-called when Christopher 
Columbus sailed to discover the new world ; and it is a matter of regret, if not of 
humiliation, to find in Webster's Unabridged, published no later than the year 



12 SEVENTH ANNUAL MEETING. 

1882, the same definition employed as used by those ancient mariners, viz. : "One 
who insures ; an insurer ; so-called because he underwrites his name to the condi- 
tions of the policy." 

In 1726, Nathan Bailey of London published his dictionary, in which the first 
attempt was made to give a complete collection of the words of the English 
language — in this attempt underwriters were ignored. The word has been in 
use from a period when individuals issued their own policies, down through the 
age of mutual insurance to the corporation plan where we find it to-day in greater 
favor than ever. Many worthy and learned peeple, themselves insurers, say an 
underwriter is one conceived in wisdom and born to fill the office, who, if not 
perverted from his natural tastes, will lead in his profession. The same has been 
said of poets, and can truthfully be said of butchers, bakers and candle-stick 
makers. On the other hand, how familiar the boast that our business is no longer 
a harbor of refuge for broken-down bankers and merchants — a charge, by indi- 
rection, that such business people once used insurance offices as a place of last 
resort. If so, why not? If "broken-down" means lack of capital, it would 
seem that just such people made fortunes and built up the great West, when 
towns like Chicago and St. Louis were young. If penniless people, with business 
experience, once had charge of insurance offices, be sure they obtained the last 
dollar of profit from gross receipts. Business experience is of more value to an 
underwriter than volumes of undeveloped theory. If one is "broken-down" in 
honor, poor in respect, lost to friendship, he has no champion here; wrecks of 
companies along this Coast may have known his method. 

An ideal underwriter is a man of vigorous intellect, robust health, and business 
habits, who knows all about insurance ; if, besides, he be a gentlemen, you there 
have an underwriter who will bring dignity and grace to the business, and force 
men to respect the calling. He will work his theories into his daily practice ; he 
will mark out a system so clear, so comprehensive, that the office force will be 
educated in his tactics unconsciously. Four years of study under such a man, 
followed by four years of practical experience in the field, will produce an under- 
writer who ean win distinction and become a leader in his community. All 
managers are not good underwriters, any more than all lawyers are good advocates. 
The corporation of the present hires its brains; and it matters nothing to a board of 
directors to enquire into the definition of the term, provided their affairs are 
successfully managed. Even an underwriter respects skillful management in a 
business rival, though that rival be indifferent to forms or unable to criticise 
adjustments. 

Special agents are not always underwriters, though bowed with years and rich 
in experience ; and, if he be an underwriter, he may fall short of the requirements 
of a manager. Young specials are often placed in a position where it is necessary 
for them to assume to be underwriters ; fine points, requiring immediate decision 
come before them ; circumstances arise where, for the time, they are by their acts 
the company itself ; put to their wit's end ; forced to think quickly ; miles from 
home ; mail and telegraph alike powerless to aid them ; they do act intelligently 
and well, binding the company thereby. 

Returning to the office, full of enthusiasm, — perhaps tinctured with vain glory , 
— expecting approbation, not to say promotion, they are met with what seems to 
them cool indifference ; " they have accomplished nothing more than the occasion 



PRESIDENT'S ADDRESS. 13 

demanded." Who can tell the torture of this reaction to a sensitive mind? If 
you send a boy to do a man's work, and he does it well, give the boy a man's 
praise. 

To the young special I would say, be of good cheer ! nothing is impossible to 
him who is in earnest. Most of all, you need control over yourself ! What 
stage presence is to an actor, self-control is to the special agent. Bury egotism 
out of sight as quickly as may be ; drop the personal pronoun ; learn something 
from every man you meet ; study character night and day — you cannot learn 
varied phases of human nature too quickly for your own good. One great advan- 
tage age has over youth is the ability to detect spurious representation — you can 
steal a march on age by study. 

If you are bored with cheap talk, or abused by insolence ; if you are ignored 
by older men, or feel insulted by studied neglect, — control yourself ; regard it in 
the light of a lesson, and from it learn how to avoid similar discomforts. The 
knowledge thus gained will enable you to repel obsequious attention and detect 
fraud. Above all, and through all, preserve your self-respect, which should be 
essential to an underwriter. 

Adjusters seldom claim to be underwriters ! Questions which stimulate the 
brain and try the strongest nerve of these indispensable workers are not such as 
bring the mind into channels leading either to the management of affairs or the 
securing of business. Adjusting is a distinct study of legal and equitable effects ; 
and yet some adjusters are good specials, as well as competent managers. 

Here is where a system asserts itself. Trained youth pursue a course of study 
which leads from a petty clerkship to stages embracing solicitor, local agent, spe- 
cial agent, adjuster — even to the manager's chair. The fittest survive, — the weak 
go to the wall. The ladder is hard to climb ; without courage and application no 
one can hope to reach the topmost round. Once there, do not neglect the golden 
opportunity — grasp the prize ! The individual furnishes the brain, the corpora- 
tion supplies the coin. Being so, guard well your health and strength, my friends 
— if the brain gives out you are lost. 

Pixley truly says : "Money has neither conscience, patriotism nor principle : 
it has one single object, and that is self -protection. " You are valuable to your 
employers only so long as you retain your "grip." There is no sentiment in the 
insurance business. 

Having considered an underwriter, let us observe his duties. Underwriting 
has been called by several titles,— by some, an art ; by some, a science ; by some, 
a simple business proposition. It is an art and a science in the same sense as 
arithmetic; namely, the science of numbers and the art of computing them — 
the art of computing average ; the art of making schedule sheets ; the art of 
showing the expected life of each class of risk, and the science of naming a rate 
consistent with the foregoing, which will produce a profit. 

The principle of all business is gain. In this business, over and above the 
expenses for time, material and brain, there must be a percentage of profit on 
capital invested, and a reserve for use in time of unusual disaster. 

In other kinds of business, there are combinations which have for their pur- 
pose the enriching of some at the expense of others who are " short "of a cer- 
tain commodity. This species of gambling is in no wise to be classed with combi- 
nations called " Boards V in insurance parlance. Here the rules are designed to 



14 



SEVENTH ANNUAL MEETING. 



be measures of protection from just such features as " shorts; " they place busi- 
ness on a living basis, and stipulate only, that members shall pursue a uniform 
method of securing and retaining it. With them the price of a policy is based on 
long years of experience, regulated by all kinds of circumstances. The argument 
in favor of a rate, and the rule by which it is governed, is no secret : it is the 
privilege of the assured to know all about it. 

As an Association we know nothing of Boards ! We are simply in the insur- 
ance business ; bound by a common tie, — good fellowship. We know that organ- 
ized control over the actions of an insurance man does not necessarily create him 
an underwriter. 

The time may come to this coast (as it has come to the rest of the United 
States) when there shall be nothing but wear and tear, friction and bitterness — 
the rates that now know us shall know us no more forever, and we shall sigh over 
wasted years of earnest toil. Nor is it alone a matter of rates. Retrenchment 
is expense ; reduction of excessive commissions ; small savings in each depart- 
ment will produce a surprising difference in an annual balance-sheet. New com- 
panies are coming all the time to seek for business and share receipts. As well 
try to fasten the " Golden Gate " with lock and key, as to put obstructions in the 
way of these companies. To compete by throwing aside, one by one, every busi- 
ness safeguard, is the method of childhood or old age. 

It is human nature to buy in the cheapest market : it is a business instinct. 
To the unthinking, the cheapest company is the best ; and while cheap companies 
are here, they will receive their share of patronage. The question is not how to 
remove them, but how to unite with them on some equitable plan. East of 
the " Rockies " this question has been met by putting all companies down to the 
level of the cheapest. 

Indemnity cannot be sold below cost ! Hundreds of companies have surren- 
dered their charters, and hundreds will follow before this pregnant truth is real- 
ized. I have faith in the native sense of the underwriters of the Pacific to be- 
lieve they will set an example of united effort which will arrest the attention of 
insurance men everywhere. In order to emphasize a point which I wish to make, 
the following table is introduced, showing the number of companies doing busi- 
ness in the State of California, the premiums received, the amount written, and 
the assessment value of property for the ten years from 1872 to 1881, inclusive : 











Assessed Value of 










Improvements on 


Year. 


No. of 
Co's. 


Premiums. 


Amount Written . 


Real Estate and Per* 
sonal Property, Ex- 
cept Money. 


1872 


38 


$2,388,542 93 


$200,178,417 uO 


$261,478,444 


1873 


50 


2,926,631 95 


184,545,576 00 


201,758,153 


1874 


68 


3,139,679 60 


197,432,160 43 


287,014,583 


1875 


74 


3,493,381 39 


221,653,671 98 


282,414,617 


1876 


85 


3,711,618 08 


237,013,036 73 


230,610,865 


1877 


89 


3,933,920 62 


256,893,278 42 


228,494.702 


1878 


91 


3,539,522 22 


238,639,040 93 


220,960,351 


1879 


99 


3,433,004 15 


228,964,659 84 


208,542,591 


1880 


98 


3,620,267 09 


252,179,530 40 


261,192,929 


1881 


106 


3,812,436 49 


261,342,912 78 


261,394,019 



PRESIDENTS ADDRESS. 15 

The item of assessed value includes only improvements on real estate and 
personal property, except money. Outside of the city of San Francisco, these 
figures can fairly be called insurable value, because assessments are consistent in 
their methods. This is demonstrated in the table by the years 1874-5, when the 
experiment was tried of assessing property at its full cash value. I am indebted 
to the State Comptroller for these figures, and to the Insurance Commissioner for 
other figures. 

In 1872, thirty-eight companies wrote $200,000,000 on a valuation of $261,- 
000,000. This was after the Chicago disaster, when all classes were seeking in- 
demnity. In 1873, with an increase of 12 companies ; and in 1874, with a fur- 
ther addition of 18 companies, the assured were again luke-warm and the com- 
panies careless. In 1876, the fight was active : 85 companies wrote $237,000,- 
000 on a valuation of $230,500,000. From this time, and including 1879, values 
declined. I need not recall the dark days of California. In the same time, com- 
panies increased to 99, and succeeded in writing from $18,000,000 to $20,000,000 
more than the assessment figures. 

In 1881, 106 companies wrote $261,342,912, on a valuation of $261,394,019, 
putting forth all their force in town and country to hold and improve business. 
Thus, with 68 more companies at work, the amount written in 1881 was but 
$61,164,495.78 more than in 1872 (call it 1-15 more), while the insurable value, 
after ten years' fluctuation, was about the same ; which seems to indicate that, 
until the State itself improves, no better showing can be made by companies, so 
far as volume of business is concerned. 

It would not be fair to average the amount written in proportion to the 
number of companies, any more than it would be fair to divide the wealth of the 
State by the number of inhabitants. 

There is material in this table for a long article. I will not tax your patience 
further, but, as an interesting point, call your attention to the fact that the 
average rate in 1881 is twenty-three per cent, higher than the average rate of 
1872. This much is taught by this table, — if, during a time of business depres- 
sion, waning population and ebb-tide generally, offices have been able to surmount 
the obstacles of competing companies and show a profit on each annual balance- 
sheet, it is a poor business scheme to meet advancing prosperity with all methods 
abandoned, all rules suspended. 

It is unfortunate that at any stated time a majority of our field men are liable 
to be out of town. We have tried monthly meetings, which were slimly attended ; 
we have tried quarterly meetings with no better result, and I believe semi-annual 
meetings would not improve things. I therefore recommend a return to the 
monthly meeting, trusting to the elements to favor the plan. I also recommend 
to my successor the plan of calling upon the members in turn to produce a paper 
or essay at each meeting. This plan was suggested by President Hopkins, and 
for some time worked with fair success. As an educator, both in writing and 
in the wholesome criticism called forth, it is unequaled. 

I would earnestly call the attention of special agents to the evil of rebating 
commissions as practiced by the local agent. United and persistent effort will 
check these rebates in a remarkably short time. I know of cases where individ- 
ual effort has stopped it. It is better to encourage an agent to write business at 



h; SEVENTH ANNUAL MEETING. 

low rates than to wink at his rebates. It is an injury to the whole business, and 
no company gains by it. 

I believe the earthenware chimney to be an inanimate incendiary ; between 
expansion and contraction they are liable to crack open just where they come 
through the roof. I would ask those who meet with such cases to report them to 
the Secretary. 

I cannot close without a word of thanks to the donors of our library fund. 
Every office in San Francisco contributed generously. The Library Committee 
have expended money judiciously ; and I trust the same gentlemen may be allowed 
to complete the work so intelligently commenced. 

We are indebted to Mr. C. C. Hine, of the Insurance Monitor, for a paper to 
be read at this meeting ; also, to Mr. W. J. Broderick, of Los Angeles, and to 
Mr. T. C. Van Ness, attorney, of this city. To the Coast Review this Associa- 
tion is under many obligations. 

In conclusion, this Association, founded in 1876, ou the broadest principles of 
united effort possible to any business, has so far accomplished the ends it aimed 
at that fears have been entertained lest it fall sick of mutual admiration, and die 
of inaction. Such fears are groundless ! There is to combat them, youth, health, 
originality and literary ability of no mean order. 

Here, in the Association of the Pacific, is found a restful sense of something 
more than dollars in the business — something less than jealously. All respond 
cheerfully to the call, and produce such papers and essays as time and duties 
permit. When it is remembered that for the most part these are "maiden 
efforts," a clear horizon of possibility seems to open before us. I can wish noth- 
ing fairer to the incoming administration than the kind and willing assistance 
rendered by associates during 1882. 

The Vice-President : Gentlemen, you have heard the annual 
address of the President, and I think I speak the Association 
when I say that it is one of the best that has ever been read 
before this body since its organization; and I have no doubt 
that before this session closes the President will receive a vote 
of thanks, as he deserves, not only for his address, but for his 
active efforts in behalf of the Association. 

Mr. C. Mason Kinne : I move that he get the vote of thanks 
right now r . I move, sir, that our retiring President be tendered 
the hearty thanks of the Association for his able and interesting 
paper. 

The motion being put by the Vice-President, was adopted. 

Mr. Kinne : I now move that the thanks of the Association 
be tendered to our retiring President for the able manner in 
which he has performed the duties as President of the Associa- 
tion for the last year. 

Motion adopted. 



LOCAL AGENTS. 17 

The President (resuming the Chair) : Gentlemen, I have the 
characteristic modesty of an insurance man, and can only thank 
you for your kind action. I have no wish to repress your en- 
thusiasm ; but it seems to me unnecessary that one should be 
tendered thanks for what he was elected to do. 

Mr. T. E. Pope read his paper on " Local Agents." 

LOCAL AGENTS. 

Mr. President and Gentlemen : — What agents are and should be are not 
always synonymous. Insurance forms and agency duties are better understood 
when discussed and criticised : hence we offer a few suggestions, feeling that insur- 
ance work should be thorough, based on what study and experience show to be 
necessary to company, agent and client. 

Applicants for insurance frequently fail to note essential conditions upon 
which the value of the contract depends ; and it is a fair Assumption that the agent 
who elects to act as confidential adviser of his customer should understand con- 
tracts entrusted to his making — fortunately many do — others carelessly issue 
policies which in case of loss involve the company in objectionable litigation or 
cause a forfeiture to the assured of a protection which, though not expressed, 
may have been desired. If insurance is granted, the wishes of the assured 
should be plainly expressed in full ; the policy in its details should have the 
same care as is given to a mortgage or deed. Insurance means indemnity for such 
loss as is represented by the cash marketable value of property at the time of. 
fire, which may have been damaged or destroyed ; and the whims of the assur-ed, 
who places a fancy value on an article priceless to him as a relic but valueless to 
others, cannot be allowed. This primary idea of insurance should be noted. 
Property fluctuates, and merchandise and buildings either appreciate or lessen in 
values. If values advance after insurance is granted, and a loss occurs, the 
assured should clearly feel he is entitled to a settlement under the policy on a 
basis of such increased values. In the same spirit of fairness, if property depre' 
ciates during the life of insurance, such depreciated values must form a basis for 
an adjustment of loss. The tendency of the present agency system is to over- 
crowd various fields of insurance work ; and an eagerness for increased receipts 
often causes the appointment of men who are not advised as to the meaning and 
intent of insurance ; men whose ideas of the business end with soliciting risks ; 
men with a narrow conception of what companies have a right to expect of them, 
who are satisfied to be the careless pupils of careless specials : if services are to 
be of value to the company they must be rendered intelligently, making due 
allowance for the complaint that every other man in the community is an insurance 
agent. We assume that there are too many agents, and as a result too few receive 
an income which induces proper study ; nor do they receive such advice from 
managers or specials as is demanded, the inference seeming to be that they should 
intuitively know what years of experience has seemed necessary to develop in 
others. The idea that rates are too high seems to be a common error accepted as 
truth by such agents as are pleased to admit it, either because the applicant says 
so, or because a rival agent offers a reduction. The tendency of shrinkage in 



18 SEVENTH ANNUAL MEETING. 

values induces a demand for reduced rates : hence the importance of a correct 
understanding of why, as a rule, they should not be reduced. Incendiarism and 
a want of care, or carelessness, are chargeable with fully one-half the cost of 
insurance ; and it is also true that a shrinkage in values largely induces incen- 
diarism. If this is a fact, then the remedy must be not in reduced rates but in 
reduced lines ; make the assured co-insurer if incendiarism is to be lessened. 
Again, we understand that a loss ratio of fifty per cent and an attendant agency 
expense of forty per cent leaves a margin, though small, in excess of the actual 
profits of fire insurance for the year just passed. The agent understanding what 
the intent of the contract is, that rates are barely paying, must familiarize him- 
self with other requirements, such as the legal bearings of the conditions of the 
contract ; the danger of ambiguity in its language, the necessity of full application 
with questions of values, interests, title, other insurance, dangers threatened, 
etc., — answered as being of importance and becoming a part of the policy. 

So, too, in case of possible double insurance on mortgaged property, issue 
policies to the owner only, securing, if desired, the interest of mortgagee by the 
11 Loss, if any, payable to " clause. 

A personal supervision of liens and risks is also imperative. Close scrutiny of 
the internal or external hazards of a risk when first accepted or subsequently 
renewed may disclose facts which will be deemed sufficient to withhold a policy 
and prevent the carrying of a line which a subsequent adjustment discloses as 
unreasonably bad ; nor should agency work end with soliciting and a judicious 
handling of business. Effort should be directed toward the correction of 
unfair public sentiment, toward inducing public interest in all measures intended 
in any way to lessen the burden of losses sustained by communities or companies. 
The immense volume of waste by needless fires throughout the country demands 
that building laws, incendiary legislation, fire limits, shall receive attention — 
consider the question of accountability of those upon whose premises fires occur ; 
restrict by legislation the amount of insurance granted or accepted to three- 
quarters of the property value, thus releasing communities from so costly a 
temptation as over-insurance. Business in general is said to suffer from too great 
competition, and in our field of insurance there are evidences that the dangers of 
excessive competition must be considered specifically and not in general terms ; 
careless appointments, excessive commissions, frequent rebates, carry their dan- 
gers, and have reduced the receipts from country agencies to a figure little in 
excess of expenses and losses. 

That the companies would be glad to receive a percentage of profit smaller 
than the commission paid to local agents is of little importance to them as long as 
they can on demand get even more in some quarters. The same spirit of selfish- 
ness influences to many of us. For instance, an effort is made to induce a 
concerted action on the part of the management of the leading insurance agencies 
toward a reduction of expenses. All are consulted ; all gladly respond and a 
reform is announced, but proves a failure. Selfishness in some peculiar case says 
No ! and it develops that because a pet, agent who receives twenty per cent or 
more, threatens to place his business with others if his commission is reduced, 
has carried his point and has dictated a policy for his general manager to follow. 

Such an agent gives me $10,000 in premiums; his business is unattended with 
losses — all profit. Such reasoning would be weakened by a dwelling loss of a 



FORMS OF FIRE POLICIES. 19 

similar amount. Profits or losses are not calculated upon any one agency, but 
from classes of risks carried by the company in general. 

If competition is excessive ; if irregular practices are encouraged by reckless 
appointments and extravagant compensation paid, — it is the duty of all to consider 
possible remedies. It is suggested, then, that the present method of compensa- 
tion should give way to one which would reduce the number of agents, — would 
elevate the standard of others and lessen the cost of insurance in general. I 
refer to the idea of a fixed commission of ten per cent (wh'ich about equals the 
commission of twenty per cent, less rebates), and a contingent commission of ten 
per cent on the yearly profits of each agency. Excessive commission men would 
revolt, rebate men would be forced to reform or quit, and business would 
revert to old agents of the ten per cent school or new ones of equally sound judg- 
ment. The incentive would be strong to overcome carelessness, to secure the 
good and avoid the dangerous, to more fully induce public caution, to become an 
insurance expert fitted to protect the interests of himself, client and companies; 
and, it seems to us, a reasonable deduction follows, that, so guarded, the business 
can be made more prosperous. 

The objection that an agent would be reduced to a ten per cent basis and hence 
would decline to act is unreasonable. First, the fact of his having several 
companies makes his compensation over-run with some while reduced with others, 
the result being a good average in any event, and a decided increase if business 
is attended by small loss. Realizing that ninety per cent of the insurance 
business passes through agents' hands, and that the aggregated losses of the last 
quarter of a century have exceeded the aggregated premiums received, we cer- 
tainly have reason to criticise the present system of agency work. Insurance is 
far-reaching in its results ; and a study of it brings a realization of its dignity 
and functions. Friendly to public interests, it has become necessary to business, 
giving required protection as the basis of credit in its branches available to all, 
and a silent factor which cannot be eliminated from any industry. A restoration 
to business channels of $100,000,000 and over, yearly burned, depends on its 
maintenance. Such being its influence, the details of its workings should be 
entrusted to men of known character and not to those of low cunning. 

In conclusion, we submit our report, feeling that the intelligent business ele- 
ment among local agents will say, Amen. 

The President : There are interesting points in Mr. Pope's 
paper, which will bear discussion, gentlemen. 

Mr. W. M. Chalmers read his paper on Forms of Policies. 

FORMS OF FIRE POLICIES. 

Mr. President and Members, of the Fire Underwriters' Association of 
the Pacific : 

As Chairman of the Committee on " Forms of Policies," it becomes my duty 
to submit the following report : — 

This important subject has been so ably handled by my predecessors in our own 
Association, and by others of kindred associations, that I have found the task a 
somewhat difficult one. As was remarked by an illustrious individual of ancient 
times (and quoted by our President to-day in his address), " there is nothing new 



20 SEVENTH ANNUAL MEETING. 

under the sun ;" I fear that what I have written may prove to be stale, — perchance 
flat, — but, I trust, not unprofitable. But, perhaps, like an esteemed friend of 
in i ne, who lately made known to the members of this Association the hitherto 
unknown " Grecian " Sphinx, I may have succeeded in unearthing something new 
in my present effort. 

When the first policy of insurance may have been issued is veiled in obscur- 
ity ; but writers on the subject inform us that away back, even as early as the 
fourteenth century, insurance policies were known ; and we find that various gov- 
ernments, even then, passed laws regulating insurance, and enacted certain con- 
ditions on which the contract was to be based. In those early days, of what 
may be called the dark ages of insurance, people did not know as much as they 
now do, and underwriters had not been put on their mettle, so to speak, to pro- 
tect themselves against dishonest claimants. So we find that then the form of 
policy was extremely simple, and contained but few, if any, of the numerous 
conditions of the present time. 

In those days, inasmuch as insurers undertook to pay the sum named in the 
policy, irrespective of the damage sustained, conditions were as unnecessary as 
adjusters. As timed rolled on, individual underwriters formed themselves into 
associations or corporations ; we begin to find certain conditions in the policies, — 
such as requiring claimants in case of dispute to submit to arbitration ; notice of 
other insurance ; fixing the maturity of claims at sixty days ; excepting certain 
articles as not covered 'by the policy ; limiting the quantity of gunpowder to be 
kept on the premises, and so forth. 

There must have been a gradual increase of dishonest claims, for the com- 
panies continued to add condition after condition, until, as we read, towards the 
close of the last century, a meeting was held in London, protesting against these 
so-called innovations, but apparently without effect ; for the companies went on 
adding to the conditions until we have the present huge, overgrown, puzzling, 
and, to the uninitiated, incomprehensible policy of our own times, which is but 
seldom read by the insured until after a fire : when it becomes the unpleasant 
duty of the adjuster to endeavor to solve the mystic problem, and enlighten him 
as to the fact that he has vitiated his policy by the infringement of some of its 
conditions, or that some item claimed for is not covered. A learned judge has 
remarked : ' ' Many of the companies have encumbered their policies with so 
many conditions that they can seldom be held responsible for losses except at 
their own option." And another says of these conditions, that, "if strictly con- 
strued, they take back all the policy grants, and leave the insured nearly as 
empty-handed as he began." 

That something ought to be done towards remedying this evil is well known 
to us all, and especially to those members of this Association who are adjusters. 
How to effect this remedy, it is difficult to determine. An effort was made some 
years ago to do so, by what is known as the "National Board Form," and, still 
later, by the "Standard Form ;" but so many of the companies preferred forms of 
their own, that these forms have not been adopted ; and, the result is, we have 
policies often covering the same risks, the conditions of which are conflicting. 

My well-known modesty forbids me, on the present occasion, taking up your 
time by submitting a new set of conditions. That task, in my humble opinion, 
ought to be the province of abler and more experienced men than myself, aided 



FORMS OF FIRE POLICIES. 21 

by the most profound jurist of the day ; so that when, unfortunately, we have 
to go into Court, our policy conditions will stick, and not be treated as if only 
"sound and fury signifying nothing." 

I shall, however, trespass on your time so far as to suggest a few changes in 
the conditions which I have found useful in settling losses, and some of which I 
have inserted in policies lately prepared by myself for some of the companies rep- 
resented by the firm whose adjuster I am. Among these changes I may name 
the following : I not only require the insured to submit to an examination under 
oath, but include his, her and their agents and servants. How often do adjusters 
find that a clerk or agent of the claimant knows a great deal about a fire, which 
under the usual form he cannot compel him to divulge. 

Again, when personal property is damaged, the insured shall forthwith put it 
in order. I have inserted the words best possible order. Some of you will remem- 
ber a case, not a hundred miles from Eureka, Nevada, where, had these words 
been in the policies, a great amount of trouble would have been avoided. 

Again, as to the certificate under the hands of a magistrate or notary public, 
I insert the words, or Chief of the Fire Department, making it obligatory, if there 
is such an officer at the place where the fire occurs, to produce his certificate, 
instead of that of a notary public. The reason for this is obvious. 

Again, in case of difference aising, the matter must be submitted to two 
appraisers, they first to choose a third party to act with them, if necessary, to 
estimate the damage, whether the loss be partial or total, and that the insured 
shall sign an agreement, submitting the matter to these appraisers. Lawyers 
claim, and I think correctly, that there is nothing in the present policy requiring 
the insured to sign an agreement of submission to appraisement. They also 
claim that the policy makes no provision for an appraisement on a total loss. 

Again, after the word, ' ' fresco- work, " which is not covered unless specially 
mentioned, the words, or "ornamental painting," should be inserted, — it being 
a disputed point in this country as to what is " fresco" and what ornamental 
painting. 

The "Sun" Insurance of this city has in the conditions of its policy a very 
important provision ; namely, in case the company elects to rebuild, it requires 
the insured to pay to the company the difference between a new and an old build- 
ing, and, if necessary, to furnish bonds to secure such payment. 

There are many other improvements which might be advantageously made in 
the present condition of our policies ; but time forbids me dwelling longer on that 
part of my subject than to suggest, that all unite in having the conditions so 
framed that "he who runs may read," and that the interest of both the insured 
and the insurers may be mutually protected. 

So much for t he printed portion of the policy. And now a word or two as to 
the written portion, a matter of the hightest importance to both contracting 
parties, as also to the adjuster, who, when the loss occurs, has to construe the 
meaning of the written matter. It has occurred to me that many of the misun- 
derstandings as to the property insured are caused either by a lack of knowledge, 
or carelessness, on the part of, not the insured, but of the party who took the 
application. Agents and others upon whom devolves the duty of receiving appli- 
cations should know how to write a policy so as to cover everything intended to 
be insured by the applicant, who is not presumed to know what items should be 



22 SEVENTH ANNUAL MEETING. 

specially mentioned, in order to be protected in event of loss. A store-keeper 
insures his stock, and supposes his fixures and store furniture are covered ; a 
householder, his furniture — and rests secure in the belief until a fire comes, that 
his books, printed music, pictures, and so forth, are insured. Now, parties 
applying for insurance ought to be fully informed of all this, and thus save much 
annoyance to all concerned. Hence the necessity of properly instructing agents 
on this point, and of having carefully trained men at head-quarters to receive 
applications, instead of, as is too often done, delegating that duty to some novice 
in the business. 

Next in importance to writing a policy so as to cover all the insured intended 
to be covered is the necessity of writing it so as to protect the company. To do 
this, avoid writing blanket policies ; segregate the various items as much as can 
reasonably be done ; and see that your polices only cover the property while 
contained in the particular building in which it was insured in the first place. 
Avoid writing a non-concurrent policy. The -law protects the insured against 
loss because of this ; but the companies suffer, and sometimes unseemly contro- 
versies arise among adjusters from this cause. 

There are many other suggestions which might be offered on the proper writing 
of policies ; but feeling that I have already occupied too much of your time, I 
shall conclude by expressing the hope that the time is not far distant when a form 
of policy can be agreed on and adopted by all companies, which will alike protect 
the interests of both contracting parties. 

The President : Gentlemen, let me repeat that if anything in 
these papers provokes a desire to discussion we will be pleased 
to hear your voice, even in opposition. It is a satisfaction to 
note that one is not only able to point out an evil but to suggest 
a remedy. This paper of Mr. Chalmers should receive other 
attention than being " filed away." 

Mr. Geo. D. Dornin : I will renew a suggestion made at the 
last meeting, that these papers be made a topic of discussion at 
special meetings. I would suggest that it be understood, that at 
the next meeting Mr. Pope's paper be discussed, and at the fol- 
lowing meeting Mr. Chalmers' paper. 

The President : The hour having arrived for the reading of 
Mr. Z. P. Clark's paper on "Losses and Adjustments," reminds 
me that duty in the field denies us the pleasure of listening to 
him. Mr. Kinne will read for him : — 

LOSSES AND ADJUSTMENTS. 

Mr. President, and Gentlemen: The prosy subject of "Losses and 
Adjustments" has been so ably treated by our learned predecessors that little 
is left for your present Committee to write about. We call it a prosy subject, 
because the poetry of our work leaves off where the financial tide begins to ebb. 



LOSSES AND ADJUSTMENTS. 23 

Your Committee for 1881 presented a very exhaustive paper upon the rise and 
progress of the profession of fire underwriting from its inception down to the close 
of the year of our Lord 1881, effectually closing the gate to that field of research 
against your Committee for 1882. During the twelve months following, nothing 
of particular importance has occurred within our work-a-day experience, unless 
it may be that one of our able and esteemed members has discovered a "new 
version " of the " Reading Rule," or, as they say in the play, "a new way to pay 
old debts. " 

This discovery the writer of this paper took occasion to celebrate in the 
colums of the Coast Review. That article conceived, in a spirit of merriment, 
and those following it, have, we are assured, done more towards attracting the 
attention of General Agents and Adjusters to the great necessit}^ for some rule of 
general applicability and acceptance for the distribution of non-concurrent losses 
than anything else within the experience of our Association. We have even 
received letters upon the subject from local agents in various localities, to whom, 
in our letters of reply, we have set forth the importance of wording all co-insur- 
ance policies alike. No doubt some good has resulted in this direction. We 
trust that the Special Committee appointed at our last annual meeting, to deter- 
mine a rule of general adaptability, have prepared to acquit themselves with all 
the glory which a successful effort in this direction would surely bring upon 
them. With them we leave the subject. 

The year just closed has been one of unusual disaster and adversity to insurers. 
It is true, premiums have increased within our own territory from $4,938,000 in 
1881, to $5,534,000 in 1882,— a growth of about $600,000. But, on the other 
hand, we have losses swelling from $1,750,000 to $2,719,000, — an increase of 
nearly one million dollars during the same period ; and ratios have been changed 
from 35 to 49 per cent. 

While this ratio might not prove surprising to our Eastern officers, whose esti- 
mates are generally based upon a 50 per cent loss ratio, it is so foreign to our local 
experience that managers are casting about for the causes which may have led up 
to it. 

There has been no abnormal commercial or financial depression during the 
year ; and the number of failures has not been unusual. Hard times and*frequent 
failures being considered factors producing numerous fires, we must look farther 
for the causes. The season was not an unusually dry one ; a fair amount of grain 
was garnered for export, giving to the agricultural regions more than average 
returns in money. Still, the larger losses and the greater conflagrations occurred 
in this State, in the better built valley towns, notably Fresno, Willows, Red 
Bluff and Los Angeles; while Nevada, a State hitherto prolific in fires, has 
escaped with nominal loss. Tombstone, a frontier mining camp, began the year's 
"baptism of fire" not unexpectedly to careful underwriters. The approximate 
or total destruction of a new town built upon the mushroom growth of new 
mining districts is among the things so likely to occur, as to be regarded by the 
cautious underwriters as almost inevitable ; but that we should be called upon to 
class our granger villages and cities among those doomed to the same expectations, 
reverses all our traditions and upsets all our theories. 

It has been suggested, and we think very sensibly, by one of our most capable 
members, that one of the causes governing this unusual experience may be found 



•24 SEVENTH ANNUAL MEETING, 

in the fact that this Coast, especially California and Nevada, has been in a semi- 
transition state. The opening up to easier access of the new territories of Arizona 
and New and Old Mexico, with all their wealth of minerals and adventure, has 
renewed the spirit of unrest indigenous to the California and Nevada pioneer, 
miner and frontiersman, and they have obeyed the impulse to ''move on" until 
Arizona owes to them almost entirely her population, and until their tents dot 
many a hill-side in the Mexicos. 

The plodding life of a ranch town hangs heavily with one accustomed to the 
rush and excitement of the camp, and sacrifices of property follow rapidly upon 
the heels of desire to disassociate them. 

It is, we believe, admitted that the increase in insurable values keeps pace 
with the increase of population. In traffic, money and bonds will accumulate, 
but houses and goods do not, unless there be people to use them. 

Now, while the population of this State has decreased through the drafts upon 
it, as above stated, the amount of insurance written in 1882 exceeds that of 1881 
by nearly six million of dollars, and this in the face of the fact that lines on grain 
in warehouse have been but a fraction of the preceding years. 

Upon this increase of $6,000,000 we have taken a premium of little more 
than $200,000, or an average rate of 3 J per cent, which is more than double the 
average on the entire business of the year, and of the average on the increase of 
the preceding year. From this we infer that, in the increased competition and 
scramble for business, our agents have loaded us down with extra hazardous risks 
not heretofore acceptable, or have permitted themselves to over insure where the 
moral hazard was bad and the applicant ready to pay. 

We believe that herein lies the secret of our past year's misfortunes ; and we 
cordially recommend every office to give itself a season for thorough spring 
gardening. Go through your country blocks with a fine tooth rake, and weed out 
every risk about which there hangs the slightest question. We assure you that 
values have not increased in California in the same proportion as have ' ' risks 
written," and that every endorsement from agents granting additional insurance 
should be closely scrutinized. Investigation will convince you that a majority of 
them should not be approved ; you will lose some risks, but you will avoid losses. 

In contradiction of the statement, that values have not increased, the assess- 
ment roll may be cited. We grant it may show an aggregate exceeding that of 
former years. But we believe this more than accounted for in the new manner 
of making returns at the approximate worth, as required by the new Constitution, 
instead of at twenty -five per cent to fifty per cent thereof, as formerly. 

Another possible contributor to the disasters of the fall and winter months 
has been the unusual cold weather and consequent building of fires in stores and 
places that have not been used, perhaps, for years. Frequently the burning of 
accumulated soot, the imperfect flue, or the disjointed pipe, is announced by the 
bursting of flames through the roof, and the shouting of the neighbors. We 
have found many such in our personal experience. Badly-constructed grates 
furnish their full quota of losses, notably in the serious damage to several expen- 
sive dwellings in this city and the destruction of Corbitt & Maclay's building in 
Portland — all within a few months. 

While on this subject, we would suggest. to your " Committee on Forms of 
Policies " the incorporation in policy conditions of a stipulation that fire-grates in 



LOSSES AND ADJUSTMENTS. 25 

buildings must conform to some prescribed form of construction (to be agreed 
upon by a board of experts), and that losses resulting from a failure to observe 
the condition shall not be borne by the company. Or, if this should prove inex- 
pedient or impracticable, we would suggest to the Board of Underwriters an extra 
premium on property provided grates, not constructed of at least two layers of 
fire-brick laid in fire-proof cement, and where the studding runs down beside the 
fire-bed. 

(We trust the Board will pardon our presumption. ) So much for losses ! Now 
for the adjustments. We believe the hackneyed expression, " Adjusters are 
born, not made," the vilest rot. Idiots are born, or are frightened out of their 
senses, and we have yet to find an "adjuster"'' who is a born idiot or who has been 
frightened, except it may be that nervousness caused by "tick-tack" on a window- 
pane at midnight might be called fright. 

In the days of the Argonauts, to which the memory of our younger members 
runneth not, the adjuster may have been " born;" for then they had not the time 
nor the wherewithal to " make " them. Latterly they have been " made " of the 
material at hand ; and it is an interesting question whether nature has been a 
better builder than man. 

Tradition has it, that in the days when eggs were a bit apiece, and roosters laid 
most of them ; when ranchers kept vast herds of cattle, and were strangers to 
milk and butter ; when two bits was the smallest change known to the Pacific 
Slope ; when churches, school-houses and account-books were unknown, — not 
infrequently important questions were decided by a toss of the dice or a bout at 
high-low-Jack-and-the-game (commonly known as "California Jack"). 

If an adjuster was properly " born " he was pretty sure to win the toss or cut 
the Jack and walk off with the stakes. In cases of seriously questionable losses, 
loud denunciation, flashings of blue lights and display of armament frequently 
prevailed against the shivering claimant to the surrender of his policy, the con- 
sideration being " love and esteem " for his own whole skin. In cases of honest, 
legitimate claims, small losses were sometimes paid liberally, and the fact duly 
published with a grand flourish of trumpets that the store and saloon-keepers on 
" Nigger" and " Rattlesnake Bars" might learn of the extreme generosity of the 
company paying. 

Things were done in those days upon a scale of extravagance unknown to the 
present underwriter. Lines were estimated not by individual risks, but by whole 
towns. The announcement of the burning of one building was usually interpreted 
as meaning the whole town. Rates were high, traveling expenses enormous, and 
per diems correspondingly large. 

But times have changed. We now deal with the "made" adjuster, he who 
is "made" to toe the mark to conform to established business rules, to follow 
decisions of courts and to respect the rights of others. In other words, " made " 
to advise the payment of every loss, wright or wrong, that he has the misfortune 
to be connected with. 

And this brings us to the consideration of some recent decisions of interest to 
all adjusters, and some suggestions growing out of same. For the legal bearings 
of these decisions we are indebted to Mr. Wm. Thomas, of this city, a very com- 
petent lawyer and kindly gentleman. The late ruling of Judge Hunt in the case 
of Hart vs. British and Foreign Marine Insurance Company adds one to the 



•2<> SEVENTH ANNUAL MEETING. 

;il ready long list of modern decisions against insurers. Of course, the ruling is 
not conclusive, but it will be the law applicable to all cases tried in San Fran- 
cisco until the question can be settled by the Supreme Court, which always has 
the " last guess. " The ruling in that case is one of particular interest to adjusters, 
as it concerns the course which they must advise their companies to pursue long 
before the case is placed in the hands of attorneys. 

The defense in the case in question was the concealment of a fact material to 
the risk. Judge Hunt ruled that this was no defense unless the company pleaded 
and proved that it rescinded the contract before the commencement of the action. 
This decision was based upon the provisions of our Civil Code, which, after giving 
the right to rescind in cases of fraudulent concealment and representations, pro- 
vides, in Sec. 2583, that wherever a right to rescind is given an insurer, such right 
may be exercised at any time previous to the commencement of an action on the 
contract. Judge Hunt reads " may be exercised "as " must be exercised." 

The common law was and is that a fraudulent concealment or representation 
rendered a contract of insurance void ab initio. Judge Hunt, under the authority 
of this section, makes it voidable merely, and the avoidance must be evidenced by 
a notice of rescission. 

We quote from Mr. Thomas : "With due respect to as learned a Judge as 
there is in this State, the decision is too broad, for it covers cases where the fraud- 
ulent concealment or representation was not known to the insurer until after suit 
has actually been commenced. In such cases, the defense of fraudulent conceal- 
ment could, in our opinion, be set up. But if the opinion is confined to cases 
where the fraud is discovered before loss, or even before suit is brought, we think 
the ruling sound and entirely consistent with those provisions of our Civil Code 
which provide that a contract entered into through fraud is not void, but voida- 
ble by rescission. " 

In the light of this opinion, in cases where fraud is discovered before suit is 
brought, companies should rescind, and herein it is well to discuss what should 
be done in order to make a valid rescission. In such matters the Civil Code lays 
down clear and simple rules : — 

First. You must give notice promptly that you rescind your contract upon 
discovering facts which would lead a reasonable man to believe that facts did 
exist which would entitle you to rescind. If you hear rumors or receive informa- 
tion which may lead you up to a knowledge of the necessary facts, it is better to 
rescind at once. 

Second. The Code provides that you must, in cases of rescission, restore any- 
thing of value which you may have received under the contract. You must, 
therefore, tender to the assured his premium. It is true that, in cases of ' ' actual 
fraud," the assured is not entitled to a return of the premium; but, in most cases, 
it is impossible to ascertain whether the fraud is merely probable or actual. By 
" probable," we mean those cases where the assured omits to state a fact material 
to the risk by mistake or negligence or accident. In such cases the contract 
would be subject to rescission, but the assured is entitled to a return of his 
premium. In cases where the facts learned are conditions precedent to the con- 
tract, the entire premium must be returned ; for in such cases there has been no 
liability and no premium has been earned. In other cases, as of attempted arson 
or incendiarism, only the unearned premium estimated from the date of such 
attempt need be returned. 



INSURANCE LEGISLATION AND TAXATION. 27 

One more suggestion in regard to rescission. It is not necessary to tender the 
premium in cash; an offer in writing, — and it must be in writing, — to pay the 
amount of the premium, is, if not accepted, equivalent to the actual tender of the 
cash itself. 

After notice of rescission, it is perhaps unnecessary to suggest that the greatest 
care should be used in further dealings with the claimant. The tendency of 
modern decisions is greatly in favor of the doctrine of "waiver." The case of 
Titus vs. Glens Falls Insurance Company, decided by the New York Court of 
Appeals, in 1880, is very extreme. It lays down as a broad proposition, that if 
you have any negotiations with the insured after knowledge of facts which 
entitle you to rescind, which negotiations are based on the policy, or require the 
claimant by virtue thereof to do some act or incur some expense, the forfeiture is 
waived. You must not, therefore, demand proofs of loss, demand examination of 
the insured, or enter into any agreement with him for an appraisement, unless 
you expressly reserve the right of rescission, even upon grounds already known to 
you, slight though they may be. 

The President: Gentlemen, we are favored this momma- ■ Mr. 
Clark's paper is as full of " meat " as it can be. 

Mr. T. A. Mitchell reads his paper on " Legislation and Taxa- 
tion " : — 

INSURANCE LEGISLATION AND TAXATION. 

Mr. President and Gentlemen of the Underwriters' Association of 
the Pacific : There is no class of business conducted in the country that is 
legislated on to the extent that the insurance business is. To the underwriter, 
this question of regulating it by law, is indeed a most important one, and, we 
may add, a very serious one. You will all recognize that fact. Not only in our 
own State, but in almost every State of our Union, are we threatened with a 
perfect tornado of law-making, hostile and adverse to the best interests of under- 
writing as a business. 

The chief aim of the average legislator appears to be to concoct and place 
upon the statute books of his particular State something regulating insurance 
companies more absurd than the law of any other State, and particularly of the 
State whose legislature has just adjourned after doing all the damage they could. 
To be brief : they seem to desire to take the making of the entire policy contract 
upon themselves, and, in case of loss, to adjust it. 

The majority of this attempted legislation, if not so annoying and vexatious, 
would be ludicrous in the extreme, and how it can originate in the minds of men 
of average business ability and capacity is past finding out. 

The honest property-holder does not ask for the passage of any such absurd- 
ities as are before the legislatures of our own and several other States, at the 
present time. The policy contract of to-day gives him indemnity, which is all he 
wants, and all he pays for ; he is satisfied that in case of loss his claim, if just, 
will be met honorably, and he bases his opinion on the honorable record of the 
company that protects him, the same as he does on that of the banker, or the 
merchant with whom he deals. 



28 SEVENTH ANNUAL MEETING. 

We repeat, that this almost constant agitation we are subjected to, every time 
a legislature meets, does not arise from any grievance or desire on the part of the 
property- owners, the parties in direct interest. 

It principally arises from that curse of our country, and especially of our own 
State, — Politics. Politicians and their friends (call them the lobby if you choose) 
are fully aware of the dangers the underwriter apprehends when the legislature 
meets, and they always make the best use of such knowledge ; for we soon hear 
of deposit bills, tax bills, and that king of horrors, the valued policy bill, all 
being introduced (by request), and in this w T ay are insurance companies made the 
special target of the friends of legislators. It would almost seem incredible that 
such attempts should be made to damage, if not destroy, a business of such mag- 
nitude and importance ; but the facts are, nevertheless, that such is the case, for 
we are threatened with it every session of a legislature. 

This whole question of legislation, and attempts at legislation, has been 
so ably handled by the leading underwriters of the country, by the insurance 
journals, and so thoroughly by the legislative committees in our own State, with 
all of which you are so familiar, that your committee feel as if it would hardly 
be possible for them to prepare a paper with any original thoughts in it on the 
subject that w T ould be of benefit to the Association. 

In our State, as you are all aware, there is some very hostile legislation threat- 
ened. 

Mr. Wharton's bill provides that any company hereafter admitted to do 
business in this State must have a paid-up capital of .$500,000 ; that foreign com- 
panies must have a United States deposit of same amount, and imposes tax on 
premiums received by all non- State companies. 

This refusing admission to companies unless they have a paid-up capital of 
$500,000 is a mistake ; for it would bar out companies that have a surplus over 
capital of nearly one million of dollars, and would allow a company to enter, pro- 
vided it had the necessary paid-up capital, if it did not have a dollar of surplus. 
In addition to that, if $200,000 paid-up capital is considered enough for companies 
to enter the great States of New York and Pennsylvania, we don't see that Cali- 
fornia should refuse them admittance. 

We want no deposit feature of any kind on our statute books. The proper 
place for a company's collaterals is where they are under direct control of the 
management, and can be used at a moment's notice for payment of loss claims at 
any agency the company may have. We are aware that our English friends have 
been decidedly in favor of the deposit feature, when insurance legislation is ram- 
pant ; also, that all the leading English companies have very heavy deposits in 
America, which have given them towers of strength and confidence in American 
underwriting ; but w-ould it not be better for the policy-holder if the entire 
amount of each foreign company's assets were in such shape that every dollar of 
it could be used at any point where needed, instead of being held by the treas- 
urers of the several States in w^hich the deposits are made. 

They cannot well have all their assets in U. S. registered bonds ; and it might 
be well to note that the State Treasurer of two States (Tennessee and Alabama) 
have already absconded this year, and that there are ten months of the year yet 
left. The city of London recently had a fire which only destroyed some three or 
four buildings; yet we see some companies lost from $250,000 to $400,000. 



INS URA NCE LEGISLA TION A XI) TA XA TION. 29 

Should it be visited with a conflagration of one-tenth of the proportional magni- 
tude of the Chicago or the Boston fires, it might be very comfortable for English 
underwriters, instead of having their American assets tied up, to have them in 
such condition that could be reached at once. 

The property- owner has no desire to see any company that can comply with 
the present law, driven out by any deposit feature ; and if he prefers the policy of 
a German, Swiss, French, Australian or New Zealand Company, with no deposit 
here, to the policy of an American company, with millions of dollars invested in 
the country, or to that of an English company that has from choice made large 
deposits in other States, we say let him have it — don't build up a Chinese wall 
around our State on this deposit feature, and drive out any company that can 
comply with the present requirements of the Insurance Commission. 

We look upon what is termed the insurance district law, in force in the State 
of Massachusetts, as affording to the policy-holder a surer safeguard than any 
deposit law ever enacted. Each city in the State is laid off into districts by the 
Board of Aldermen, and plans of same are sent to Insurance Commissioner for 
his approval. No company is permitted to take in any district so laid off a greater 
amount at risk than the amount of its surplus to policy-holders ; so in case of 
general conflagration, a company could at least pay its losses in the district. 
This is the true plan for protection, not only of the policy-holder, but of the 
company as well, and we commend it to the law-makers of our State if they wish 
indemnity for their constituents. 

We are opposed to a tax on premiums. It simply means that the property 
owner who wishes to protect himself against loss has to pay a State tax for the 
privilege of doing so ; for if he does not pay it directly, he has to pay it in the 
shape of increased rate. 

Mr. Kelly and Mr. Perry both have valued policy bills before the Senate. 
The only difference between them is that Mr. Kelly's applies to real property 
only, while Mr. Perry's to both real and personal property. If the latter bill 
should become a law we presume that no reputable company would issue a policy 
on personal property. The valued policy feature on real property is dangerous 
enough to make, the careful underwriter shudder ; but this feature applied to 
personal property is simply diabolical ; in fact, is entirely too aggravating, and it 
would be a waste of your time to discuss it from any stand-point. If the feature, 
so far as it relates to real property, should ever be placed on our statute books, — 
and it may possibly be some time, for already in two or three States it is a law, 
and several others are threatened with the infliction — if the underwriters as a 
body will only refuse to insure to a greater extent than one -half the actual cash 
value of the property,— the people will be so disgusted with the valued policy bill 
that they will demand its repeal at the first opportunity. In this would lie our 
remedy. We look upon this whole matter of valued policies as being in direct 
violation of the first clause of Section 2551 of our Code, which says : " The sole 
object of insurance is the indemnity of the assured ; " and Section 2527, which 
defines insurance as " a contract whereby one undertakes to indemnify another 
against loss;" also, Section 2550: "The measure of an insurable interest in 
property is the extent to which the insured might be damaged by loss or injury 
thereof." 

How can such bills become a law in face of these sections of our Code ? It 
would be a matter for our courts to decide. 



30 SEVENTH ANNUAL MEETING. 

Mr. Perry also introduces the following bills, which will be of interest to you : 
No. 313 provides that the transfer of the thing insured transfers the policy, and 
the owner thereof succeeds to all the right of the original policy-holder. This is 
indeed a very dangerous bill, and taken in connection with a valued policy bill, 
would make a very pretty combination for the incendiary. 

No. 312 reads; "The fact that an insurance is taken out in the name of a 
person other than the owner of the property insured shall be no defence in an 
action brought to recover damages by reason of any loss, provided the owner of 
said property and the person in whose name the policy is issued join in an action 
for the recovery of the amount of such insurance." 

This is another dangerous bill, for it throws the door wide open to fraud. 

The last clause of Section 2551 of our Code, in defining insurable interest, 
says : "If the insured has no insurable interest, the contract is void," which is 
in such direct opposition to last-named bill, that the former would not stand. 

No. 317 provides that no proofs shall be required of a loss, except to notify 
the insurer. This is short and to the point; but we understand it has been 
amended to read: "and to furnish such proofs as are required by the direction of 
the Insurance Commissioner." 

No. 315 provides that the insured can cancel at any time, and the company 
shall be liable for a proportionate amount of the premium paid. 

In short, this is pro rata cancellation. 

Before closing, your Committee desire to call your attention to a bill before 
the legislature of the State of Pennsylvania, which provides that actual posses- 
sion of a policy is evidence that the premium has been paid. If such a law is 
held to be constitutional, we think all policies issued in that State will be paid 
for on delivery. In our State, where the credit system is carried to such extremes, 
a modified form of this bill might be of advantage. 

Mr. Geo. D. Dornin : I take exception to the statement that 
English companies are favorable to the deposit laws. They were 
proposed originally for the benefit of local companies ; but, like 
all such measures of hostile legislation, they reacted. I am op- 
posed to deposit laws here or elsewhere. This position I have 
always maintained and fought for, not only when an officer of a 
local company, but in my more recent association as representa- 
tive of a foreign company. 

Mr. Mitchell : It was not intended to be personal. 

The President : I wish to say that when I called upon Mr. 
Mitchell for a paper, he modestly requested me to take his name 
off the list, saying he had never written a paper in his life. I 
hope other members will acquit themselves as well. 

On motion, the meeting adjourned until two o'clock. 



CO-OPERATION. 31 



AFTERNOON SESSION. 

The President : Gentlemen, we will proceed with the exer- 
cises of the meeting. 

Mr. Geo. W. Spencer: I take pleasure in introducing Mr. 
Geo. F. Ashton, our newly-elected member. 

The President : Mr. Ashton, we welcome you to the meeting 
and to our Association. 

Mr. Mitchell : I would ask the privilege of changing a sen- 
tence in the paper I read. In place of saying, " Our English 
friends are favorable to the deposit feature," I will say : We 
have been aware that our English friends have been in favor, etc. 

The President : Gentlemen : we are now to be favored with 
a paper from the hands of Mr. C. C. Hine, editor of the Insur- 
ance Monitor, New York, a gentleman who needs no introduction 
here, — one who has for perhaps more years than he cares to ac- 
knowledge written and spoken insurance sense, and who kindly 
consented to give us a paper upon some subject, which subject 
he was requested to choose. " Co-operation " is the title of the 
paper which Mr. Carpenter will read for Mr. Hine : — - 

CO-OPERATION. 

Some thirty years ago, when I was chairman of a lecture committee in a town 
in Southern Indiana, where I then resided, Professor Dana, of Yale, came out 
and gave us an address on the coral reefs of the South Pacific. It was an enter- 
taining lecture ; but just why he should have traveled all the way from New Haven 
to New Albany to talk to a Hoosier audience about coral I did not know then, and 
have never found out since. Probably there was not a man in the town who had 
any immediate interest in coral beyond his baby's necklace, or who had ever seen 
a piece larger than the specimen in his neighbor's parlor cabinet ; and yet we sat 
and "took it all in," just as matter-of-course like, as if we had been a tribe of 
naked South -Sea Islanders, instead of an audience of well-dressed, Nineteenth 
Century Indianians ! It is barely possible that I have harbored thoughts of 
revenge in my heart ever since ; I would be unwilling to attempt to trace the 
thread so far back ; but I can advance no better theory to explain why I have 
selected " Co-operation " as the theme of a paper to be sent all the way across the 
continent and read at your annual meeting ; so, if the subject should turn out to 
be malapropos, and if anyone should require explanations or apologies, I beg in 
advance to refer him to Professor Dana ! It would be rather late in the day, and 
by a somewhat circuitous route, if poetic justice should reach him, and I am not 



32 SEVENTH ANNUAL MEETING. 

sure that lie is still living ; but in any event I repudiate all responsibility for the 
laches of our lazy President, who had the opportunity of selecting my theme, and 
might have sent me to discoursing learnedly to you about the history of insurance, 
or adjustments under non-concurrent policies, or the rise and fall of the National 
Board, or the mysteries of spontaneous combustion ; but who, with a singular 
disregard for the feelings of his constituency, instead of doing either, told me to go 
as I pleased ! It would hardly be the square thing for me to punish you too severely 
for his dereliction, otherwise I might talk to you for an hour and a half about the 
high moral duties of underwriters towards the public, and remind you that insurance 
is the handmaid of commerce ; or exhort you, in extenso, to hold high the banner 
of professional honor, and never tell a lie or divide a commission with the insured, 
and so on and so forth ; but as I have done all those things several hundred times 
already, and have not written or uttered what I shall now present to you more 
than a dozen er twenty times, and as I am a merciful man anyway, and as I have 
just returned from a visit among you, having been treated most royally by the 
Pacific Coast underwriters, one and all, I yield to the sweet impulse of gratitude, 
and will certainly be brief while I try be be useful. 

Co-operation is a good thing under almost any circumstances and in almost any 
connection, because it means harmony, unity and prosperity, instead of discord? 
division and adversity ; and there are some conditions under which Co-operation is 
possible, while there are others under which it appears to be impossible. There 
are some things that lead me to think that Co-operation is not adapted to the 
American atmosphere, or else that our atmosphere is not adapted to it. In 
England there have been some examples of eminent success in Co-operative 
stores; the experiment was transplanted to this side recently, and a Co-operative 
establishment, with $250,000 capital and more than five thousand stockholders for 
customers and well-wishers was started in New York, under what appeared to 
be the most favorable auspices. It ran a brief twelve-month and closed its doors 
last December, with the closing year, an utter failure, — a magnificent fizzle ! 

Co-operation to be permanent must be slow, and Americans think they cannot 
wait for fruits of slow growth. Its foundation stones should be laid deep, and all 
the superstructure built with care and patience, and those who co-operate must be 
moved with a desire to work for the general good, content in the belief that the 
general good will reflect its rays of prosperity on them. But Co-operation, as we 
have known it in insurance circles, has only been resorted to as a hasty expedient 
when companies were in distress : — 

When the Devil was sick, the Devil a monk would be, 

When the Devil got well, the devil a monk was he ! 

Companies have not gone into Co-operation for the general benefit, but each 
for whatever of immediate good might accrue to itself — every one for himself, 
and bad luck take the hindmost. That this is not the sort of material to build a 
permanent structure of, everybody knows, and no one who is accustomed to con- 
sider effects in relation to their causes is at all surprised at the failure of a 
National Board or of any simil ir organization. It is a common saying all through 
our fraternity that only another Chicago will induce Companies to observe good faith 
with one another, and that even then they will keep it only as long as the smart 
lasts ! Nothing abiding can come of such practices as these. I do not make these 
remarks because I am inimical to the National Board or any other organization 



COO PER A T/OX. 33 

tli.it can do good to insurance, but because I have been an attentive observer of 
» the progress of affairs, and do not believe that permanent Co-operation will ever 
result from the desperate efforts of men who are merely trying to solve the prob- 
lem of immediate distress. The old National Board was never a good illustration 
of Co -operation ; in its prime it was simply a successful dictator, antagonistic and 
imperious as Nebuchadnezzar with all who did not bow down and worship on 
its little plain of Dura. It was not an open Co-operative, but a close corporation, 
dominated by its executive committee, which was, in turn, ruled by a few able 
minds, lording it over companies and agents alike. This was the basal reason of 
its decline. It did some good work in its day, but it had within itself the elements 
of disintegration, and these asserted themselves the moment the pressure of imme- 
diate distress was removed. It is not unlikely that the companies will again 
emerge from their valley of humiliation through the gates of a National Board, 
and that that organization will recoup and again exercise a controlling influence in 
American Fire Insurance. Let us bid it God-speed in any work which it may 
undertake, even for the temporary relief of our harassed profession; and let us 
hope that it will take counsel of past experience and wisely enlarge the field of 
its observation so as to avoid past causes of failure and include coming elements 
of success. 

I am incredulous, however, about the permanency of any scheme of Co-opera- 
tion which covers so much ground and so many diverse interests as the National 
Board assumes to cover. I will speak of this further along ; but just now I wish 
to talk about some of the causes of competition, some of the hidden springs of 
emulation and rivalry that are not generally recognized, and which I have not 
seen mentioned by other writers. 

I have discovered a set of facts to which I have several times alluded edito- 
rially, but which appears to have made a much deeper impression upon myself 
than upon my readers, — a not unfrequent experience among the children of 
genius ! The facts are these ; I invite your close attention to them, for they seem 
to be united with a principle which is of almost universal application, and which 
underlies this subject of co-operation and explains many of its difficulties : 
Begin with the very substratum of labor ; take the men who dig for day wages, 
the men who carry burdens, who wheel dirt and lug the ties in railrbad building, 
who load and unload ships ; come along up through the draymen, the drivers and 
porters ; come further, and observe the multitude of mill operatives and the noble 
army of mechanics ; come still further, and take note of the skilled artisan, the 
carver, the modeler, the piano maker ; among all these you will find no under- 
cutters ; such a thing as competition against one another is practically unknown ; 
they will unite together and strike for higher wages, but they cut one another's 
prices, never ; the idea of undercutting, as well as its practice, seems to be wholly 
foreign to them . 

Come still higher, and look abroad over the whole domain of individual effort, 
and find me, if you can, undercutters among the farmers, the lawyers, the artists, 
the doctors, the ministers, or even the editors ; they are not there. So long as men 
Ukbor with their own hands and brains for their own sole benefit ; so long as they 
depend for bread, or for wealth, upon the products of individual exertion, — the 
factor of undercutting competition does not enter into their plans ; you do not find 
it until you cross the line where men deal in the products of other men's labors ; 



34 SEVENTH ANNUAL MEETING. 

and even there it is graded and guarded, until you reach the realm of corporate 
life, where it runs rampant. 

Merchants compete with one another sharply ; they make runs on particular 
articles to attract custom ; they advertise cheap counters and remnants, and make 
up on other goods sold to customers thus attracted for the reductions so made. 
Unlike the merchants, we, alas! have only one article to sell, — Insurance; and 
when we cheapen that we prove the reverse of the popular maxim to be true, and 
demonstrate that competition is the death of trade. We see, then, that men 
who work with their own hands, or trade with their own money, do not com- 
pete, or, if they do, do not venture recklessly on the danger line ; and we are 
compelled to look among those who employ other men's money, notably those who 
work through the instrumentality of joint-stock corporations, for that heroic and 
fearless contention which disregards consequences and brings a business into that 
condition of infirmity and laxity which now pervades insurance. 

Let us see whether known facts sustain this theory. I will allude to a few 
that are notorious in New York and well known elsewhere, or which have parallels 
elsewhere, which are probably known to all of you. (a) There are only four trunk 
lines of railroad from the Atlantic sea-board westward — only four, and the news- 
papers are constantly filled with the history of their rate wars. I have ridden 
from New York to Chicago for seven dollars, and I think it likely that I may do 
so again. How easy it would appear to be for only four managements (there are 
more than two hundred competing insurance companies) to get together and agree 
to that which would be for the advancement of all their interests ; but how diffi- 
cult it really is. (b) There are not to exceed a dozen corporations controlling the 
interests of the great anthracite coal fields, with their railroad and marine 
accesories : not a large number to harmonize it would appear, but they have been 
as fierce for one another's throats as so many bulldogs. Latterly there has been 
more evenness in the prices of coal, but consumers can remember seasons when the 
prices have been jumped up or down a hundred per cent, (c) There are but two 
great steamboat lines from New York to Boston, and the same number from New 
York to Albany ; and yet for years passengers were carried from New York to 
Boston for a dollar, and at one time, I believe, they were carried from New York to 
Albany for ten cents. I suppose that only those inside of transportation circles have 
any adequate idea of the fierceness and intensity of the competition existing there, of 
the elaborate and subtle schemes for outwitting one another, of the adroit intrigues 
with ticket agents and of the size and sort of commissions paid them. If the 
whole truth could be come at, I have no doubt that the nineteen points made by 
Mr. Hope against the insurance companies (which, in bad faith, pay extra com- 
missions via the circumlocution office, while pretending to pay only fifteen per 
cent direct) could be beaten clear out of sight, and the insurance people shown, 
by comparison, to be a set of innocents; but does anyone suppose that men 
employing and hazarding their own money solely would transact business on such 
bases as these? We have no experience for believing it possible. Gamblers and 
speculators, in the insane hope of immediate gain, will risk their all sometimes 
upon the turn of a single die ; but nowhere except in corporate life do we find this . 
deliberate and long- continued strife, which none know better than those who 
practice it, fraught with fatal disaster to the interests involved. Men who are 
timid and conservative in all their individual affairs and personal relations, become, 



CO-OPERATION. 35 

as soon as they go into a board of trustees, or sit down in an official chair, pos- 
sessed with the idea that the very nature of their responsibilities is somehow 
changed ; and these reckless competitions, once entered upon, appear to have a 
fascination about them as irresistible as that which overcame the cautious old 
party, who, in great trepidation, ventured on board a western steamboat for a trip 
to New Orleans with a shipment of hams for that market. Nothing could exceed 
his timidity when contemplating the frailty of the vessel on which he was sailing 
and the numerous dangers which environed the river navigation. Shortly a rival 
boat came up behind, and the excitement of a prospective race spread among all 
on board. The furnaces were stimulated and the speed increased until the labor- 
ing engines made every timber and plank in the whole craft to quiver. Our timid 
friend was thoroughly affected; presently his enthusiasm reached a point in 
inverse r^atio to his former caution, and, as the rival boat gained upon him, he 
went to the captain, trembling with excitement, to know if something could not 
be done to make steam faster and increase the vessel's speed, and actually sug- 
gested that his shipment of hams should be fed into the furnaces, in order that 
their fat might intensify the fires, and, if possible, aid in beating the other boat, 
It is scarcely necessary for me to add that those hams belonged to other parties, 
and that he w*as simply acting as supercargo ; president of a Kentucky ham com- 
pany, so to speak. 

Thus we see that competition, not co-operation, is the natural outgrowth of 
corporate life and activity, where the object of that life and activity is gain. Co- 
operation among benevolent and religious societies succeeds measurably, because 
their objects are unselfish ; but the moment selfish interests come in, the}' bring 
disturbing factors ; and, unless all the selfish interests are about the same size 
and shape, and all point in the same direction, and can all be better served in 
common than by separate effort, the elements are incongruous and discordant, and 
disintegration is sure to ensue ; it is merely a question of time ; the fabric will 
certainly fall to pieces. Even in religious bodies the cohesion is lax in proportion 
to the size and number of the constituents. A single church will often work as 
one man for a particular object ; but when the presbytery, or the conference, or 
the diocese is reached, you find some who are ignorant or indifferent, or even 
adverse. If you go still further, you find, in the general assembly, yet more 
lukewarmness or positive antagonism ; and so a matter which in a single church 
or community may be red hot, coalescent, concrete, can be acted on in the larger 
body only in the most general terms, — abstract, vague and cool. 

This brings me around to a point to which I promised to give further attention ; 
viz., the difficulty of co-operating over so large a field as the whole United States, 
by any one body ; and so, to a commendation of the efforts that have been success- 
fully put forth by the Union in the Northwest, and to some extent by our own 
Association on the Pacific Coast. I have always hadfgreat respect for the maxim, 
1 ' Divide and Conquer. " One thing at a time and that thing not too large. The 
slang warning in regard to biting off more than you can chew, and Gough's old 
story about the ambitious boy who put ten dozen eggs under one hen, "just 
because he wanted to see the old critter spread herself," have a good many perti- 
nent applications ; and I have often thought of them when contemplating the 
ponderous and ineffectual efforts of single organizations to cover the whole field 
of insurance in this country. 



36 SEVENTH ANNUAL MEETING. 

It is an axiom that the larger and more diverse the interests are, the more 
difficult it is to combine and harmonize them ; rules which apply to township gov- 
ernment are simple, easily understood and easily applied, compared with the 
affairs of a State or Nation. What is true of the township is true of the Local 
Board, and for much the same reasons ; I would, therefore, with all my powers, 
labor for Co-operation in small spots and a good many of them ! 

There are Local Boards which were established two, ten, twenty years ago, 
that have been since the hour of their organization, and are to-day, successes, 
eminent successes ; and I would look to the cultivation of Local Boards, just as I 
would look to the welfare of the multitude of rootlets which supply the tree with 
moisture and nutriment. Take care of the pennies and the dollars will take care 
of themselves. Look well to the Local Boards, and the great body of insurance 
will scarcely need looking after at all. 

Some of the dignitaries of the National Board may call it levity ; but that 
organization has failed in so many things, that if it should fail in what I am 
about to suggest, it would only be an encore of former experiences ; and it might 
do better than fail. I therefore beg to submit through*you for its consideration 
the propriety of adopting, as the beginning and end and sum total of its pro- 
gramme at the next annual meeting, two resolutions, viz.: — 

Resolved: First, that this organization approves, and will give its cordial 
support, both moral and substantial, to the Associations of the Northwest, of the 
South, and of the Pacific Coast, to the end that they support and encourage State 
Boards and other instrumentalities which have for their immediate aim the pro- 
motion of Local Boards, to the further end that the establishment and cultivation 
of Local Boards be stimulated to the highest possible degree of perfection. 

Resolved : Second, that we eat a good dinner together and go home. 

Then I would recommend to your Association, and to others like it, the pro- 
motion of State and District Boards, if action through them would be more 
efficient and economical than direct effort. I would have every State divided, 
and, if necessary, subdivided, so that effectual labor might be put upon local 
organizations. I would have Local Boards created wherever two or more agents 
are at work. Laying aside other matters for awhile, and looking back over the 
pathway strewn with broken promises, blasted hopes and unattained ambitions, I 
would say with him of old, this one thing I do, — I would try for co-operation 
where co-operation is easiest and most likely to give immediate and richest 
returns. 

That I am preaching no new doctrine I am well aware. I know that in several 
of the States the best thinkers and the best workers are applying their best efforts 
in this very direction; and I believe they are doing more for the redemption of 
insurance than the National Board and the United Underwriters, as such can do, 
and for the reasons already indicated. 

You will ask me if I expect to reach Utopia by this route ; not by any means. 
There will always and everywhere be impracticables and obstructionists who will 
furnish impediments and failures enough to keep any enthusiast humble ; but I 
would do the very best I could at each point ; and so, by diligent local culture, 
attain to an aggregate advance and improvement over the whole field, that would 
in due time pay handsomely for the effort, and be likely to remain permanent. 

Do I mean, by this transfer of effort to local points, an abandonment of central 



CO-OPERATION. 37 

and united company-effort against the evils of incendiarism, arson, bad legisla- 
tion, and so on ? Not by any means. There are fields of effort and points of 
attack where the interests of all companies are identical, where there is and can 
be no diversity. All want good laws ; all want efficient fire departments ; all 
want incendiarism and arson stopped. I cannot enlarge on either of these, or a 
dozen other cognate points, for each would furnish material for a separate paper ; 
but I will say that the subjects on which the United Underwriters spent most 
of their time at their late meeting are not by any means as one-sided as some 
imagine. It is all very well for the great, rich companies to decry the "induce- 
ments " held out to patrons by companies of a lower grade than they ; but how 
shall such dispose of their wares if they cannot by some means make up for their 
inferior quality ? I am not propounding original conundrums ; I am simply echo- 
ing questions which have a thousand times been asked of me. 

Smaller and weaker companies stand at a disadvantage ; and they say the 
large companies have no right to put them at a disadvantage, and then claim for 
them a purity of practice in which, as the Irishman remarked, the reciprocity is 
all on one side ! I am no apologist for bad faith or evil practices ; but as an im- 
partial observer of the whole field, I cannot but reflect such sentiments as I come 
in contact with ; and my observations have led me into a condition of chronic 
disbelief in the practicability of successful general co-operation among the com- 
panies on the subject of uniform rates and commissions, or in the perpetuity of 
such co-operation, even when temporarily established. Each company must 
have its own points of advantage or lose its identity, and perhaps its business. 
The large, rich company offers you a policy backed by two or ten millions of assets ; 
the little company offers you one backed by two or three hundred thousand ; if 
the price and the terms are in every respect alike, which will you take ? The 
laws of trade answer that question every time, and the little company goes to the 
wall; it must sell its goods cheaper, or give a chromo, or offer some other induce- 
ment which will put it on a footing of relative equality. To ask it to give up its 
pecluliar inducement, whatever that may be, is equivalent to asking the rich 
company to give up the inducement which comes of its wealth. " Ah ! " you 
say, ' ' it would be the proper thing for the little company to become a big one, 
and exchange its thousands for millions ;" and you are undoubtedly correct : but 
the old maxim stands firm, — Non possumus omnes, which, under a specially free- 
and-easy reading, might mean, " we cannot all be opossums ! " 

I cannot say farewell to this important branch of my subject without again 
airing one of my well-worn hobbies, — Co-operation on a sliding scale ! I have often 
urged that if the companies would adopt standards in rates, as they do in sched- 
uling buildings, and then make a sliding scale, and let the companies elect which 
class they will belong to, the old and rich ones charging the full tariff rates, the 
next class, and the next, and the next, charging one, two, three, five per cent less, 
according to the class they have elected to stand in, each solemnly agreeing to 
abide by its own chosen place in the scale ; that, under some such arrangement as 
this, it might be possible to attain to lasting Co-operation. The notion is certainly 
worth thinking about, and perhaps worth elaborating with details, seeing that all 
efforts to combine upon uniform rates have failed, so far as the mass of the companies 
is concerned. I do not offer this patent attachment as applicable to the Local Board 
work which I have been urging upon you, but as a basis for National Board work 



88 SEVENTH ANNUAL MEETING. 

when that organization again attempts to wrestle with the question of rates. 
Whatever is done in any body, large or small, must, to be lasting, be upon a 
broad basis of equal justice to all. An officer of a small company once illustrated 
to me the way Co-operation had worked with him. He said : "A friend of mine, 
a poor man, had more pigs than he had food for. A neighbor of his, a rich dairy- 
man, had more milk than he had pigs to feed. So the former took two of his 
pigs to the latter and suggested that he should feed the two for four months and 
keep one of them for his pay, which proposition the other modified by suggesting, 
as its equivalent, that he should feed them eight months instead, and then keep 
both ! The other scratched his ear doubtfully, and said slowly he didn't see but 
that was all right according to the original proposition, but he believed he 
wouldn't bring over any more pigs ! " Our friend of the small company said he 
had parted with about half his business in order to do the other half amid the 
refinements of high-toned society, and it was now looking to him very much as if he 
must part with the other half if he continued to indulge in the same aristocratic 
associations. It was not very polite in me, but I remarked to him that any man 
who depended for advancement on his patrician surroundings instead of his own 
individual industry, was little short of a fool, and would probably always meet with 
the same bad results, reaching in due time a place where he would need something 
more than a good story with which to justify himself to his directors ! And this 
brings me again around to the place where every faithful consideration of this 
subject is apt to bring one, — face to face with the great difficulty of formulating 
a basis for successiul Co-operation among insurance companies. A very able man, 
to whom I once applied for a solution of this difficulty, said he had thought about 
it a great deal ; had lain awake nights over it and cudgeled his brains day times, 
in the earnest endeavor to harmonize the duty which he as an officer owed to his 
own company, with the duty which he as a good citizen of the insurance world 
owed to others ; and the best he could do, after all his thinking, found concrete 
expression in the old and wicked couplet : — 

Love your neighbor as yourself, 
But paddle your own canoe. 

Before I close, you must indulge me in a brief personal. I desire not to be 
misunderstood ; my point of observation is, or should be, a broad and impartial 
one ; but I have been giving you sketches and touches at random, as I could recall 
them, for service on the text immediately in hand. As I review what I have 
written, I seem to notice a slight undercurrent of animadversion on one class of 
companies, and of advocacy of another, and so far as this may be regarded as 
interpreting my own inner views it is erroneous. If there really is such a bias to 
this paper, it simply grows out of the subject itself and its line of treatment, and 
not out of any personal prejudices one way or the other. I was born and bred an 
iEtna man, professionally speaking, and have not forgotten, and probably never 
will forget, the traditions of my youth ; so that, if I may be legitimately suspected 
of predilections, they would be rather toward the large companies than the small. 
So far as I think I understand myself, however, my plan is to get the warp and 
twist out of all my monitor timber before I build it into articles or essays. 

In closing, I wish to remind you that your environments are less complicated 
and less formidable than those which handicap the companies on the Atlantic 
Coast. I do not seek to belittle your difficulties ; they are enough to tax your 



CO- OPERA TION. 39 

best brain and your best muscle ; but, by as much as your territory is smaller and 
less densely covered ; by as much as San Francisco is less a center than New 
York for cosmopolitan planning and scheming ; by as much as forty offices ought 
to be more easily handled than a hundred and forty ; by as much as your offices 
are mainly branches instead of home establishments, with other branches attached, 
and the thousand ramifications incident to home offices ; by as much as San Fran- 
cisco is one head-quarters, whereas New York, Philadelphia, Hartford, Boston, 
Baltimore, New Orleans, Cincinnati, et al. , are a score or more, with local pride 
and local interests arrayed against one another ; by as much as your comparative 
isolation makes you compact and independent, — by so much, and more, have you 
reason for encouragement in the prosecution of a system of Local Board work, 
which, taking up one point after another, shall ultimate in a net-work of reforms 
and improvements that will continue your business in the proud position of success, 
of which it has heretofore so justly boasted, and furnish at the same time a reason- 
able solution of that much discussed and little understood insurance problem, — 
co-operation. 

Mr. Geo. D. Dornin : I move that a vote of thanks is due and 
tendered to Mr. C. C. Hine for his excellent paper. 

Mr. Kinne seconds the motion, and it is carried enthusiastically. 

The President : Will the Vice-President please take the chair. 
Gentlemen, in this connection I will read Section 10 of the 
By-Laws, which says : — 

" Such persons as may have been engaged in the Fire Insurance business, or 
non-residents in the business of Fire Underwriting, are eligible to membership 
upon a majority vote, and shall be entitled to participate in the meetings of the 
Association, but shall be exempted from dues and entrance fees. " 

I wish this Association to do honor to Mr. Hine. Of all the 
gentlemen in the East to whom we addressed communications, 
he alone responded with a paper. He is an old insurance man 
and is eligible, and I move that the rules be suspended and Mr. 
C. G Hine elected an Honorary member of this Association. 

The motion was carried unanimously. 

Mr. C. T. Hopkins : I move that the Secretary cast the ballot 
for the Association. 

The motion was carried, and Mr. C. C. Hine was declared duly 
elected. 

Mr. J. F. Houghton : I move that the Secretary be instructed 
to notify Mr. Hine of his election. 

The motion was carried- 



40 SE VENTH ANNUAL MEETING. 

Mr. Geo. D. Dornin : I move that these papers be taken up 
in their order and made the subject of monthly meetings, and 
that the members be notified which paper will be read at each 
meeting ; this will bring out the essence of the papers and the 
thoughts of the members. 

The motion was carried. 

The President: Colonel Kinne will now favor us with the 
contents of his " California Knapsack." 

Mr. C. Mason Kinne : Gentlemen, this is not supposed to be a 
deep production, but odds and ends of such things as do not 
come to us in the shape of reports from committees. The fol- 
lowing note was sent each of our members: — 

Editorial Rooms, 422 California Street, 

San Francisco, January 15, 1883. 

Dear Sir : — The Knapsack again needs replenishing. We have been dividing 
our stores among our comrades so lavishly, that the supply of rations is nearly 
exhausted; and in consequence we propose to make a raid on the talent and wit 
surrounding our head-quarters and see if our intellectual commissariat will not be 
stocked with good things as of yore. 

The soldier can do better fighting when well fed ; and the Knapsack is at its 
best when most plethoric. 

The great fraternity of Specials and Adjusters make a goodly company ; and 
now that orders are issued we expect you to fall in 'promptly. 

Give us short, concise and pointed sketches of personal experience, ideas and 
anecdote, that the past year has stored up for you, and don't be too long about 
getting them ready. 

The flap of the Knapsack is wide open and will so remain till February 10, 
1883. Urgently yours, 

C. MASON KINNE, Manager. 



Vol. IV. CALIFORNIA KNAPSACK. - No. 1. 



EDITORIAL. 

In commencing another year of our existence, we have to offer the first number 
of the fourth volume just as it is. It ought to have been better: it might have 
been worse. 

Let it be plainly understood by contributors and patrons alike that our Knapsack 
is not one that is piled with the rest when the battle begins, but that it is carried 
with us onto the skirmish line. Of course it would become burdensome were it 
loaded down and packed full with the varied impedimenta of the raw recruit, and 
the old campaigner knows just what to throw out. Luxuries for the commanding 
officers, but essentials only for veteran soldiers. 



"CALIFORNIA KNAPSACK." 41 

The Special Agent or the Adjuster is the man who is detailed for picket duty, 
or as one of the skirmishers, and while under fire or over it, he sees things as 
they are. He is not fighting the whole battle ; statistics don't count for much 
just then. The man in his immediate front is his meat for that fight ; and whether 
it is a slippery agent or an unjust claimant, it engrosses all his attention and his 
best thoughts. 

The generals in the back office may direct the plan of the Battle of the Under- 
writers, and carry it out according to all the rules and regulations of modern 
insurance warfare, but without his efficient field officer to point out the dangers 
of the "ford " and the "pass," his infantry in the way of Tariffs, his field batteries 
of Statistics, and his cavalry charges of Special Ratings, all are met and demoralized 
and finally routed by the onslaught of partisan rangers and guerilla warriors, 
frantically brandishing the spear of rebates and cut rates, excessive commissions 
and expensive supplies. 

Insurance is a peculiar business, fraught with dangers as certain as those of 
bullet and shell. We meet the onslaught of the fiery foe first of all ; we have to 
bear the brunt of the battle. Every loss, imaginary or real, that can be put upon 
the shoulders of the insurance company, is carefully rammed home and fired with 
a short fuse. The adjuster now and then gets in a little good work, but ordinarily 
returns home feeling that he went, he saw and was conquered. His Knapsack is 
full of experiences, — good, bad and indifferent. He is at once a student and a 
teacher. Losses educate the people to insure ; adjusters inform them of details 
and necessary preliminaries that hedge about the path of indemnity, that they 
never thought of before. It is a new schooling for them and the adjuster is the tutor. 

But the field-man finds his capacity is of a dual character. To-day the wearied 
adjuster, to-morrow the worried special. Tutoring a claimant in the paths of 
rectitude to-day, but a few hours finds him schooling the local agent how not to 
cut rates and yet talk business to win. Trying to convince him that commissions 
for himself is not all he has to think about, and that the tariff is not the immacu- 
late personification of insurance judgment. That Book 4, as applied to a 
California town or village in Eastern Oregon or Washington, is to be construed 
simply as a minimum guide, and not a maximum solution of what to charge for 
a broken frame range or a B-class building exposed by a long row of frame houses, 
in which cloth-lining and stove pipes predominate. 

But it is not for the Knapsack to moralize. Its duty is to convey such facts 
and experiences as may be placed within its protecting folds, and not manufacture 
them ; to absorb, and not-theorize. We have to give you to-day a little of all 
sorts ; from grave to gay, from water supply in San Francisco, to whisky straight 
in the mountains. There might have been more ; there ought to have been much 
more offered us from out the varied episodes in the work of our specials and 
adjusters, supplemented by the careful thought and wise experience emanating 
from those who occupy the sanctum sanctorum; who sit at the helm of the various 
ships sailing with their mingled fair winds and foul, over the troubled sea of 
insurance. But what we have is good, and of a character for such a receptacle ; 
while the various committees can deal with the weighty problems of Losses and 
Adjustments, Forms of Policies, Statistics, etc., with suggestions thrown in of 
how to reform evil practices, and elevate the profession generally. 

The Editok, 



42 SEVENTH ANNUAL MEETING. 

QUERY. 

Should the cigars the Adjuster smokes be charged in Expense Account, or to 
Loss by Fire. 



This, from a paper read by a prominent underwriter before the Association of 
the South, fits our climate so close that it will bear repeating. 

Report says that the paper was repudiated by that Association ; and it must 
have been because truth is unpopular in that neighborhood. 

He says of the "candid agent," Arkansas is a good place to draw an example 
from on this score. An agent up there offered a company a risk — a ten per 
center ; making a big, fat premium — in an Arkansas frame row, the character of 
which was so hard that it would simply have scared the average manager to death 
to have seen it. The company wrote back to know what especial feature recom- 
mended the risk. Agent replied that the chief thing that recommended it to 
him was " the commission that was in it." Yours, X. 



The following is a good deal better than no response at all. We thank "C" 
for small favors. Try again. 

Portland, Oregon, February 1st, 1883. 
C. Mason Kinne, Esq, 

Mr Dear Sir, — Your call for contributions to the California Knapsack is 
received. 

The self-assurance and cheek of the Special Agent is proverbial ; but I am 
yet too young in the business to presume to offer any sketch that would be of 
interest or entertainment to the members of the " F. U. A. " • 

Oregon is too slow and plodding to furnish any startling experiences ; but she 
can boast of more fires and larger losses to the premiums written, and more 
unprincipled insurance solicitors and agents than any other country on the globe. 
If ever I have an experience in this country of perpetual mud and slush that will 
be of interest to the Association, I shall be only too happy to contribute it. 
Wishing you a joyous reunion, I remain 

Very truly yours, C. 



Editor Knapsack : If you have found, as I have, a lamentable ignorance of 
the most common rules, perhaps you will add to this list, which is called — 

HINTS TO AGENTS. 

[ If printed on a card, why not a good thing to scatter broadcast ? ] 

In event of loss, telegraph the number of policy and probable amount of loss 
to General Agent. 

Let the assured put his damaged goods in order, sorting the wet from the dry, 
and protecting them from further damage. 

Do not assume responsibility ; use common sense ; advise and assist. 

Many of your patrons think they have no right to remove or even touch their 
goods at time of fire. An error. It is their duty to save. The property insured 
belongs to the party insuring, before, at, and after a fire. Let him proceed as he 
would if he had no policy. 



"CALIFORNIA KNAPSACK." 43 

Save books of account first. 

Do not consent to or make an endorsement on policy after a fire. 

Office and store fixtures or furniture are not covered under the head of 
" stock." 

Pictures, silver ware, ornaments, printed books, sheet music, and musical 
instruments, are not covered under the head of "household furniture." Put 
separate amount on each subject. 

Household furniture includes carpets, curtains, bedding, crockery, glass ware, 
and kitchen utensils. 

Awnings are not covered with brick buildings unless specially mentioned. 

Give permission for fifteen days carpenter work free ; after which charge as 
per rule in rate book. 

Accept not to exceed two-thirds cash value on any subject. 

Cash value is the value of "to-day" notwithstanding circumstances. 

Refer all special hazards to head-quarters without binding the company. 

Cancel and return policies when your judgment dictates ; for instance, — 
Misrepresentation on the part of the assured. 
Danger from incendiarism. 
When property is in the hands of sheriff. 
When building is vacant. 
When business is not profitable. 

Render your account current the first of each month. 

When rate is increased from any cause during the life of policy, collect addi- 
tional premium. 

Never consent to assignment except on actual sale of property insured. 

The words, "Loss, if any, payable." will protect other interests. 

The first payer must release his claim before a second can be recognized. 

Enter every change in your register. X. Y. Z. 



[In this connection we add some of the printed instructions an ex-Special, and 
now Secretary, sends his agents. They, as well as the preceding ones, are all 
good. — Ed.] 

N. B. — Please be careful and give us the size of building to be insured. 

Attachments. — When property insured is attached (before a loss), imme- 
diately cancel our policies on said risk. 

Distinctness. — If the signature of the assured on application is indistinct, 
write the name in lead-pencil on the margin. 

Remittances. — All remittances and letters address to the company, and not 
to the officers. 

TOUCHING LOSSES. 

Notice, — Upon receipt of information of a fire in your town or district, "At 
once notify the company by telegraph, giving number of policy ; where issued ; 
loss, if supposed total, or amount of partial ; name of assured, and names of 
other companies interested. 

Inventory. — Schedule immediately all property saved. 

Custody. — Request assured to take charge and protect property saved until 
loss is adjusted. 



44 SEVENTH ANNUAL MEETING. 

Perishable Property. — Use all legitimate means to dry and preserve 
property damaged. Iron and Hardware have dried by rolling in bran or shorts to 
prevent rusting. Cigars, tobacco, dry and fancy goods, clothing, linen-ware and 
such, expose to air to dry. 

Suspicious Circumstances. — Take the name and address of every person who 
knows or professes to know anything about the fire, and note all the facts relating 
thereto. 

Proofs of Loss. — Should an assured file proofs and a statement of loss with 
you before the arrival of the Adjuster, "At once notify him that you have no 
authority to receive and accept the same; but, if he desires, you will hold and deliver 
them to the adjuster of the company for him, upon the adjuster's arrival; and 
that the assured must furnish said company such further statements and proofs as 
the said adjuster may require, the company waiving none of the conditions of 
its policy or objections to the receipt of said proofs, or their correctness." 

Instructions. — Whenever in doubt on any point relating to your conduct at 
time of a loss, telegraph us for information and instructions. 

Watchman. — When property saved and in a damaged condition amounts to 
over $1,000, put on a responsible watchman until the adjuster arrives ; and no 
outsiders must be allowed on the premises, or to handle said property, excepting 
those designated by the assured to assist in separating the damaged stock from 
the sound, and to save and protect his property from further injury, or to take an 
account thereof. P. 



a lesson in rating. 

Recently in a small village I was accosted by a local agent of a prominent 
Connecticut company, and requested to settle a dispute, viz. : — 

"What is the rate on a detached frame dwelling ? " 

" Seventy-five cents," I said. 

" Well, I mean a dwelling without fresco," he answered. 

"Without fresco ? Please explain." 

Said he, " under alphabetical table of hazard, page 12 of rate book, I read : 
Frame Dwellings, see frescoed work ; D class ; 75 cents ; now, if you can't see 
any frescoed work, what then?" 

Sadly I turned to the other man, and asked, "What is your idea ?" 

"Well, / claim that under rule on page 4, — All frame buildings rate 2^ %,'' 
he replied. Explanation follows : "Confound it, my company has insured my 
own dwelling for the last three years at 2 J % per annum, and never told me I 
was wrong." X. Y. Z. 



getting board rates. 

It is said there is nothing new under the " Sun." Here^is the last in the way 
of getting Board rates : — 

Property insured: a two-story brick building, occupied as a butcher shop on 
the first floor, and dwelling on the second. 

Dwelling rate, .50. Butcher shop rate 1 %. 



"CALIFORNIA KNAPSACK." 45 

Copy of policy : — 

$ on his two-story metal-roof brick building, occupied as a dwelling, 

situate corner of and streets, town of county of 

, California. 

Term, 1 year. Rate, 50 cents. Premium, $ 

"Permission granted to cut and sell cold meats on first floor, daytime and 
evenings." Yours, X. 

[The above is a true fact and speaks for itself. — Ed.] 



HOW OUR LOSS WAS FINALLY SETTLED. 

If you should search the whole world through you would fail to find such 
another united family as ours. Our love for grandmother is woven in with our 
daily lives. Left without father or mother at a tender age, she became to us, at 
once guardian, parent, adviser, friend. We are three children, — Charlie, just 
coming of age; Kate, two years younger, and I, "sentimental sixteen." From 
infancy that blessed grandmother has nursed us through sickness, conquered our 
stubborn pride by loving means, and instilled into us habits of industry and 
economy. We lived in the family mansion of the old Harkinson estate, a few 
miles from town ; just a few acres of ground, with a fine chestnut grove leading to 
the house, a well-kept garden, and two or three out-buildings ; but oh ! how dear 
to us. Perhaps you think this a strange story for the Knapsack — wait and see. 
On the 27th of December, only two nights after Christmas, we were scared out of 
our sleep and bundled out of the house helter-skelter. " Fire ! fire ! " was all we 
heard. Wrapped in odds and ends of blankets, table-covers and overcoats, we 
watched that dear old home melt away. Huddled together at the dairy-house 
window we saw the angry flames, and saw the cause of them, too, — an earthen- 
ware chimney ! Heat within and cold air without had cracked it just below 
the roof ; no knowing how long it had smouldered. 

Even in our terror we noticed the most ridiculous incidents. We saw that 
what was brought out of the house was mostly of no value ; nothing was complete ; 
something was gone from everything. 

Of course there was insurance. Charlie informed us with pride that he had 
attended to the matter himself ; grandmother was beginning to trust matters of 
business to his care. 

Well, next day we knew no more what do than so many kittens. The local 
agent of the insurance company was dead, and we had to call in grandmother's 
lawyer, who notified the company. Next came an elegant-looking young gentle- 
man to adjust the loss. He was so' kind and explained everything with such ease, 
he quite filled us with admiration. We had a builder's estimate and an appraise- 
ment, and made out a long list of all that dear old furniture, and the adjuster 
helped ; and when he said, "let me look at the policy, please," Charlie produced 
it with quite an air, as if to say, "I am the business man here." After a look he 
said, "I want the last policy." "Last one?" said Charley, " last one — why 
that is the last one." "Oh, no," said he, " this expired in July." " Expired?" 
said Charlie, turning pale, "expired — that's all the policy there is." 



46 SEVENTH ANNUAL MEETING. 

Oh, dear ! such another time you never saw. Charlie was as limp as a cater- 
pillar. We brought ammonia and cologne and handed him over to grandmother. 
Throughout this trying scene the adjuster seemed to do just the right thing at 
the right time, and said good-bye, leaving us with the impression that we had 
cruelly deceived him. When the lawyer told us we had no claim, you may be 
sure we were a solemn quartette. Then it was for the first time we learned how 
grandmother, in the love of her dear heart, had educated us, clothed us, and reared 
us at the expense Of her own little fortune, which was nearly spent. How the 
Harkinson estate yielded nothing ; and in her extremity she had no one to turn to 
but God. Then it was we children put our talents to good use. Kate painted 
water- color sketches, which sold quickly ; I formed a music class, and Charlie, — 
well, Charlie seemed suddenly to become a man ; not that he changed much in 
appearance, but his upper lip seemed to become perfectly straight, which gave a 
determined expression to the whole face. One day he told us he had talked with 
the president of the insurance company, and was to meet the board of directors. 
What for ? Well, he hardly knew ; there was some awful mistake about the 
whole miserable business, and he could not rest until he had tried to unravel it. 

The day came — he stated his case to those twelve men as I have told it to 
you ; his whole heart was in the story, and he only faltered when he spoke of the 
wrong he had done grandmother. The Directors were interested. Said one : 
" Why, if the policy had expired, did you send .an adjuster ? " This to the Secre- 
tary, who answered: "The property has been insured with the company for 
years and renewed annually ; the adjuster was sent ^at once without consulting 
the books." 

" Was there no application for this policy?" asked another. 

1 ' No ; here is the only application ; the original, marked renewed, you will see 
from year to year." 

"If the agent who took the risk were alive," said Charlie, "I am sure he 
could explain the matter." One old gentleman who had quietly watched proceed- 
ings asked if the agent had not written a letter ordering the policy renewed. 

The Secretary retired a moment and brought in a file of letters ; selecting two, 
he glanced over them, and, with a slightly changed color, asked to see the policy ; 
then, with a dry little cough, he said : — 

1 ' Gentlemen, the mystery is solved ; this policy was ordered renewed for three 
years. By this application you see the annual rate ; the amount of premium 
paid on the policy is double the annual rate, or what we call a three years' rate ; 
clearly a clerical error on the part of the policy- writer. " 

Well ! if it had been a matter of life and death, I don't believe there could 
have been more joy manifested. Talk about corporations not having souls; those 
men congratulated Charlie, and shook hands all around with enthusiasm ; and 
the President, laying his broad palm on Charlie's shoulder, said : " Young man, 
there is a vacancy in my office for just such a boy as you, and who knows but 
some day you may fill that chair, " pointing to his vacant seat. 

Out came the nice young adjuster again with proofs of loss, and a check for 
§5,000 ; and weren't we happy ? 

And since that day the young adjuster and I have agreed to a contract of our 
own, requiring certain proofs — of affection. But that is neither here nor there. 

G. 



"CALIFORNIA KNAPSACK." 47 

The following has already been honored by appearing in print, but is pointed 
enough to bear reading again : — 

GOING FOR HER BALDHEADED. 

A certain officer recently received a report of a policy written, covering, 
among others, this item : "$150 on her wigs, braids, puffs, rolls, curls, and other 
hair for her personal use, etc." 

The particular old covey, the presiding genius of said office, exhibited an 
alarming ignorance of the subject in writing the agent as follows : "This is an 
uncommon item ; and as we find no blanks for an appropriate survey, you will 
please speedily answer following interrogations : What color is the hair ? and if 
red, decline. Is assured married or single ? If married, is her husband quick- 
tempered ? Does she ' fire up ' quickly herself ? If single, has she beaux, and 
do they smoke ? Does she use a spark arrester ? Is she a church member, and 
does her pastor smoke ? Does she smoke ? Is she near-sighted or cross-eyed, and 
are her dressing-mirror lights globed or basketed ? Is she a match-maker, and is 
she subject to 'em ? Is she a cremationist ? Has she sparkling eyes, and is she 
an heiress ? (Does not seem to be hair-less.) Limit degree of heat of curling 
irons and toilet chemicals to bay water and champagne, and not more hazardous. 
Strike out lightning clause if steel hair-pins are used, and make policy cease at 
death — that is not good on hairs to heirs in any hereafter place. Celluloid 
pins, back-combs, bang-supporters, and other articles prohibited, and power 
limited to twenty -five pounds in metal packages. If any moral hazard or enemies, 
decline." 



A MERCED COUNTY DAY-BOOK. 

The following is handed in by one of " ours," and- goes to show with what 
good things the Knapsack might be filled, if each of us would take the pains to 
jot down the amusing part of his experiences : — 

Dear Knapsack: — Lhand you some actual notes from the day-book of a 
Merced County claimant, made while trying to arrive at his loss last summer. 
He made a diary of daily experiences of this book, and of which the following 
are a few extracts : — 

June 2, 1882. 
Mrs. Brown — 

10 yds. Calico $1.00 

By 2 pds. Butter 50 

Balance 50 

Am going to Merced to a ball with Lena to-morrow night. 

June 4, 1882. 
William Stevens — 
1 pr. Boots $3.00 

These boots came from the " United Workingmen's " at 'Frisco, and give satis- 
faction all around. 
Alex Whitman — 

1 Jumper 87i 



48 SEVENTH ANNUAL MEETING. 

Speaking of "Jumpers," I took Lena to the ball last night, in my new gig. 
Staid until 3 o'clock this morning. Had ice-cream and cake at Johnnie Smith's. 
Cost 50c. apiece. Charge expense account for whole thing, $2.60. 

Lucky I came home this morning ; the sow littered last night — 9 pigs, all 
boars. 

June 6th. 
Mary Anderson — 

1 Box Hairpins 10 

1 pr. Shoe-Strings 05 

1 pr. Drawers 1.15 

1 Dung Fork 3.50 

$4 80 
By 10 doz. Eggs 2*00 

Balance 32.80 

Thermometer, 98°. Old sow not doing well. 

June 8th. 
No sales to-day. 
Lena came in this afternoon. Had a good time. Shall marry this girl sure, if 
tilings go on this way. Gave her a pair of garters. 

Charge expense 15 

June 10th. 
Mrs. Allison — 

5 yds. Sheeting. 81 .00 

1 pr. Shoes 2 . 50 

1 Corset Lace 10 

$3.60 

The old sow died last night. It was mournful to hear the poor pigs lament 
the loss of their mother. 

I has^e the honor, etc., 

One of the Rank and File. 
[The Knapsack is pleased to announce that the above-mentioned claimant has 
since married the girl.] 



The following rythmetical sketch of what will occur to-morrow night has been 
ground out by our poetic assistant ; and, in anticipation, portrays the scene 
which will follow this feast of reason when the battle of knives and forks begins. 

Itf MEMORIAL. 

ANNUAL BANQUET, FEB. 21.ST, 1882. 

At " Dingeon's " when the sun was low, 
All fiery was the kitchen's glow ; 
And swift and savory was the flow 
Of jjotage boiling rapidly. 

But Dingeon saw another sight, 
When the gong struck at seven that night. 
Commanding jets of gas to light 
The Pacific Fire fraternity. 



"CALIFORNIA KNAPSACK." 49 

Then rang the halls with orders given, 
Then waiters rushed by " specials " driven ; 
And swifter than the bolts of Heaven 
The " boys " were seated merrily. 

By host and waiters fast arrayed, 
The "adjuster" drew his shining blade, 
And, sans formality, made raid 
On all in his vicinity. 

The banquet deepens ! on ye brave ! 
Fear not dyspepsia or the grave ; 
Wave Leon, all thy napkins wave, 

And " charge " with strict impunity. 



Ah ! all must part, though many meet ; 
But months roll round with flying feet ; 
And thus again we hope to greet 

Our seventh anniversary. . U. 



A CASE OF ARSON. 

About midnight, not many months ago, the clanging of the fire alarm bell 
and the ruddy emblazoning of the fog overhead, called the citizens of Gilroy 
from their beds. 

Breathless and hurriedly they gathered from all points, and while some did 
service in the way of aiding to remove a $400 stock from the locality describing a 
$1,500 policy, others resolved themselves into the invariable "standing com- 
mittee " on the sidewalk. As one small group of the numerous body was 
conversing about the peculiarity of the matter and of the many suspicious attend- 
ing circumstances, one of Jbhe party said, in a manner showing he was in earnest, 
" Well, I'm satisfied that's an incendiary fire." 

This seemed to be a safe proposition, but somehow did not exactly meet the 
exigencies of the case in the mind of a rough-looking stranger near by, who 
excitedly broke out with the exclamation, ' ' Incendiary be d — d ; somebody set it 
afire ! " 



EMBARRASSING. 

To bluff an assessor in a country town regarding a taxable valuation, and be 
compelled to look the same man in the face a few days after, when he is acting as 
adjuster for the company in which you are insured. 



a "bar" story. 
Limber Jim Witherspoon was a character. Physically he was weak-kneed, 
and hence his nickname ; but mentally he stood pat on the most astounding and 
intricate propositions. He prided himself on a latent genius which did not find 
full scope for its exhibition in the menial occupation of wood-sawing'; but he 
patiently bided the time when "Limber Jim Witherspoon" should be a name 
that would awaken the envy of the world. His time came. Having artistically 
arranged the stove wood of the camp so that the usual proportion of sticks would 



50 SEVENTH ANNUAL MEETING. 

be just long enough to prevent the shutting of the stove-door unless they were 
driven through the other end of the heating apparatus with a sledge, he betook 
himself to the mountains, at the head of Grizzly Gulch, intent upon chopping 
government timber for the benefit of his own private and diminutive exchequer. 
The air was cold, and braced him up to that extent that he was compelled, in 
order to keep from freezing, to put more energy into the building of his cabin 
than he had ever been accused of before. Even the seams of his cheap clothing, 
entirely unaccustomed to such antics, began to laugh as he plied his lusty strokes ; 
and so Jim worked the harder — with death behind him Jim could work. 

That was a luxurious rest that he enjoyed as he spread his blankets before 
the fire and watched the blaze roar up the chimney during the week after the 
cabin was finished. He had not yet chopped any wood for market : it was "too 
darnation cold," as he expressed it, and he " guessed they'd have a chinook pretty 
soon,'' so that the weather would be fit for a white man to stir around in. So, 
between his naps and his meals and his day dreams, he ' ' puttered n around inside 
the cabin, trying to make it comfortable by the addition of such improvements as 
would commend themselves to a man of his genteel predilections. One of the 
most indispensable articles to a person of his tastes was a table ; and, as the 
roaring fire had sufficiently thawed out the frozen floor of the cabin, he straight- 
way dug the holes for the table legs. He wondered, now, if there might not be 
some gold in the dirt that came out of those holes. It was still awful cold out- 
side, and he guessed it would be easier to stay inside and experiment than to go 
outside and work. Of course he had a pan with him (no outfit was, in those 
days, complete without one). Now, Jim was one of the most "patient" men 
with his hands that was ever seen. There was no nervousness, no hurry, and he 
seemed to be humming a gentle lullaby to his pan as he sleepily moved it to and 
fro with a " go-to-sleep-my-baby " motion, that now and then allowed a 
spoonful of amber-colored water to slop over, but often didn't. 

The next day was colder than ever, but Jim was out doors.- All his worldly 
possessions were on his back, and he was headed for town. The " prospect " 
from the bed-post holes had confirmed the suspicion raised by the table-leg holes 
that he was a rich man. He had in his pocket a few grains of gold to prove 
his statement, that he had struck diggings that would " go a bit to the pan." 
He did not, however, make his discovery known upon his arrival in camp, but 
essayed his old occupation of wood-sawing. To his dismay he found that during 
his abscence his old customers, unable to get along without the warning influences 
of the profanity which his long sticks promoted, had been hiring a swarm of 
Chinamen that had come freezing with the last blizzard into camp. It was not 
until the dust in his sack required a plentiful admixture of black sand in order to 
make it hold out "four bits" that Jim became desperate and appealed to his old 
employers and to his old associates to give their own flesh and blood a chance. 
The result was that the Chinamen were "run out" of town; and as Jim saw 
them winding their way along the Grizzly Gulch trail that he had so recently 
traveled, he concluded that the balance of that day should be set apart by him as 
a season of rest and thanksgiving. But from that time on it was noted that Jim 
tried, in a forlorn hope sort of a way, to infuse more energy into his work than 
ever before ; and when, at the close of winter, he engaged to " whack bulls " to 
Fort Benton, it was surmised that it was something more than the usually lonely 



"CALIFORNIA KNAPSACK: 51 

plug of tobacco that swelled his off-pocket to its exceptionally well-developed 
proportions. Fortunately the bulls of Jim's team had been grazing on icicles all 
winter, so he had no difficulty in keeping up with them, and he arrived at Fort 
Benton in time to work; or, perhaps, we should say, "wash" his way down the 
river as dish-cleaner on the steamer Octavia. The June rise made the waters of 
the river thick with mud, so that the sepia representations of cloud-bursts and 
murky weather generally, that appeared on Jim's "plaques" were generously 
attributed to the mud, rather than to his laziness. So he was not thrown over- 
board but arrived at Yankton all right. Here he found more good luck awaiting 
him. A considerable section of land which he had taken up one day, several 
years before, when it was too hot to work, had become very valuable, and he 
found himself at once in a position to put into effect the scheme which he had 
kept secret in his breast ever since the day when he had prospected in the table 
leg shaft. 

It took some time to have his apparatus manufactured ; and it was not until 
one year later that he was on his way up the Missouri River with an iron pipe, a 
foot in diameter and a half a mile in length, with which, when placed in a " V " 
shape, he proposed conducting the only available water down one side of Grizzly 
Gulch and up the other, on to " Witherspoon's Bar." * * * * How 
his spurs jingled as he gave his horse's bit an extra twitch while riding at the 
head of the bull train bearing his " machinery " through the old camp where the 
buck-saw and the accompanying horse, without a horse, were his familiars. On 
the way up the gulch the occurrences of eighteen months before were recalled by 
the appearance of a straggling band of Chinamen staggering along under their 
heavy burdens. Were these ever his competitors ? Well, even if they were, 
that time was now passed forever ; and Jim eagerly hastened forward to the turn 
in the gulch which should-bring with him in sight of his fortune. 

A drizzling rain set in, and the night closed in thick and dark upon him and 
his train earlier than they had anticipated. Still they pressed on, for Jim was 
certain of his road, and knew that they would reach their destination in a few 
rods more. Soon, however, the road became so rough and rocky that they were 
compelled to halt and await the grey of the morning before proceeding further. 
The morning came, and for once Jim was up before the sun. He found himself 
standing on a slippery boulder, rubbing his eyes and gazing upon other slippery 
boulders and rocks and gravel, wet with the rain of the previous night, that 
made up a picture of monotonous desolation unrelieved save by the ruins of a 
single cabin that seemed to have been only recently undermined and toppled 
over by its last occupants. Little shelves and other conveniences were still 
attached to the logs which formerly composed its sides, and, as broke the day, 
so broke upon Jim's intellect the realization that he stood upon what was left of 
"Witherspoon's Bar." 

What became of him nobody knows. His gaunt outlines, with more limber 
pace than ever, were last seen in bold relief against the morning sun, as he passed 
over the " divide " to Hell Gate Canon. 

Now, all this has nothing to do with insurance ; but when the Knapsack told 
me yesterday that I must have something for its columns, I thought of Limber 
Jim, who had his "field " all worked out "by hand" by a lot of Chinamen, who 
utilized the waters from the melting snow, while he was getting ready to do the 



52 SEVENTH ANNUAL MEETING. 

work on a grand scale by the aid of magnificent machinery ; and I wondered 
whether I could not make the story fit the case of the insurance agent who wants 
a half column "ad" in the village paper, a big sign, allowance for office rent, 
power to appoint "subs," a bushel of blotters, and who never gets through 
wanting something before he gets ready to go to work. I will rely upon the intel- 
ligence of the reader to trace the simile without a " diagram." C. 



what's the use ? 

The Knapsack has proportions large enough and capacity ample enough, not 
to be compelled to turn its microscopic eye in every direction to see things as they 
are. The real Knapsack is essential to the soldier, and the old soldier is a consti- 
tutional growler ; ergo, the California Knapsack has its growl. 

What's the use of our getting together here semi-occasionally, unless some 
good comes of all this preparation, — this grouping of the thoughts and ideas 
that bother us during the year. What's the use of one writing and reading his 
paper here unless something results from it? 

We'll listen to the emanations of our Pope on Local Agents to-day, and, at the 
risk of excommunication, whip the devil around the stump in some way so as to 
steal our neighbor's best agent to-morrow. 

Chalmers will tell us what he thinks about the best way of Si-Domin our 
policies with proper forms; and then some smart Aleck will sneak in a permission 
in a policy covering a frame dwelling, so that a horse and cow may be kept in 
the basement. 

Despite the advice given us by our Clark on Losses and Adjustments, you're 
pretty apt to go right out and adjust your loss to suit yourself and apply the rule 
that works the best for you in the apportionment when it comes to contributing 
to paying under a non-concurrent policy, or dividing the expenses of a mutually 
contested case. 

Mitchell tell us what articles should be considered Staples when it comes to 
Legislation and Taxation ; and then somebody will advise trotting the " sack " up 
to Sacramento to stay the onslaught of Solons who know more about whisky 
straight than valued policies ; more about draw-poker than equitable taxation ; of 
ward clubs than re- insurance ; representatives who talk and vote, vote early and 
vote often, returning to their constituents with a calm complacency of a duty 
well performed, and brag of how they cinched the insurance companies. 

Our Chairman of the Committee on Fire Department and Water Supply, he 
of the sepulchral name but genial features, who believes in live issues and not 
those requiring the attention of a Sexton, gives you new ideas of the subject, and 
how we bleed ourselves to pay for the services of a Fire Patrol that the dear 
public may reap an unrequited benefit ; and at the next meeting of the Board the 
assessment comes in and is paid without a murmur. 

We find it a Cole day for Statistics when he and Baily get down to real warm 
work in the matter; and yet you go on writing up "Specials" and bob- tail 
ranges with a comfort only based in the big premiums they represent. 

Our Library evinces the Sjienceri&n system of getting volumes in great profu- 
sion without cost to the Association, which is heartily to be commended, but only 
results in our being possessed of a nice case of books, but seldom referred to, 



BENZINE IN CANNING ESTABLISHMENTS, 53 

and is mainly advantageous in enabling us to say, "we have the finest insurance 
library on the coast." 

Grant, the President, has told you about "bringing good into the business," 
and gives all kinds of fatherly advice ; and yet you'll pounce on a North British 
or German- American risk next week and laugh with glee as the genial George 
stands aghast at your effrontery. 

We listen to good advice about excessive commissions ruining the business, 
and then some fair-faced philanthropist will issue a 10 % city policy through a 
20 % Oakland agency, and beat the best of us. 

We're jolly good friends, and the best of business enemies ; there's many a 
way to skin a cat past finding out ; and so the Knapsack concludes as it began, — 
whatfs the use ! 



The President: We will now return to the solid part of our 
programme. Mr. W. J. Landers will read his paper on the Peril 
of Using Benzine in Canning Establishments. 

After a few pleasant introductory remarks. Mr. Landers reads : 

THE PERIL OF USING BENZINE IN CANNING ESTAB- 
LISHMENTS. 

Within a few months two large salmon canneries have burned under circum- 
stances so alike as to lead to a personal investigation of the probable cause, and 
the result is now before you. 

From a general knowledge of the reputation enjoyed by the parties chiefly 
interested, and the sworn testimony taken on the spot by the gentlemen engaged 
in adjusting the losses, it is perfectly safe to premise that the fires were not 
of incendiary origin ; that in each case the business of the day had closed ; that the 
watchmen were respectively on hand at the usual hour of 6 p. m., and that they had 
passed through the buildings according to their custom, and saw no evidence of 
fire ; apparently everything was in order. 

Concerning the Cutting Packing Company's fire, Manager Tallent testified that 
when it occurred he was in the front room of his dwelling, and started for the 
cannery, when he saw it was on fire inside ; that he was in the building about an 
hour before and there was no one in it excepting the watchman and some boys 
labeling, and that these boys were not at work near the place where the fire 
started ; and finally, that there were no lights except lanterns hanging to the 
ceiling on hooks. 

Watchman Beckwith testified that just before the time of the fire, which took 
place at 9:30 P. m., he had gone through the building, and at the time was inside 
in the packing room near the office door. To use his own words, he said : " The 
fire was in the lacquering department. There was no fire used in that part of the 
building. The fire had just started when I saw it first ; it was running up the 
side of the building, and ran very rapidly ; there had been no one in that part of 
the building since six o'clock ; I do not smoke, and never allow any one to smoke 
in the building. I have no idea how the fire occurred." 



54 SEVENTH ANNUAL MEETING. 

These two witnesses were clear and to the point, and where their testimony, 
so to speak, runs together it agrees and should be accepted as trustworthy in 
every way. 

The points are, as I indicated in the beginning, — business had ceased ; no 
one was near where the fire started ; no fires were in use in the lacquering depart- 
ment, and no lights were in use except lanterns mentioned as hanging to the 
ceiling by hooks. An incendiary could hardly have approached this part of the 
building and prepared a fire at that early hour without being discovered ; and my 
reasonable conclusion from the testimony is that the fire started as stated, in the 
lacquering room ; and my judgment is that it was occasioned by the evaporation or 
vapor of the benzine used to reduce the varnish or lacquer, coming into contact with 
fire, the process and result of which I will further describe later on. 

ANOTHER ILLUSTRATION. 

Foreman Davidson, of the Bay View Cannery, owned by the Ocean Packing 
Company, testified that the fire occurrred at 7:30 p. m., and that the men had quit 
work at six o'clock, excepting two men in the bath-room (which was a separate 
building twenty or thirty feet from the main cannery between it and the river). 
To use his words, he said : "I was coming from the bath-room when I discovered 
the fire ; I saw the smoke coming over the roof (of the cannery) and thought it 
was a steamboat ; before I got to the building I discovered that the building was 
on fire in the roof. The fire had not broken through the roof, but smoke was 
coming through. I commenced throwing water from the barrels on the roof. I 
came down and went into the building, and found the fire spreading rapidly. It 
was confined to the inside of the roof ; there was no fire on the side of the building, 
but it spread rapidly. I have no idea of the cause of the fire. There was a 
watchman on duty at the time the fire occurred." 

Watchman Sieverts testified as follows : "I went on duty at 6 o'clock p. m. ; 
passed through the tin shop and the upstairs of the building which was burned, 
and saw no indications of fire at that time ; then passed on into other portions of 
the building. Between 7 and 7 : 30 p. m. was in the packing room, when I heard 
the cry of fire. I ran upstairs and found the roof in a blaze ; but it spread so 
rapidly I could do nothing with it. Had water and buckets at hand, but was 
unable to do anything with the fire." This concluded the testimony. 

It is here in order to explain that the lacquering department of this cannery 
was directly between the bath-room, from which the foreman emerged and first 
saw the smoke, and the river; and the presumption is fair that it was from 

THIS PARTICULAR DEPARTMENT THAT THE FIRE ORIGINATED. 

With this explanation it will answer to go back over the particulars of this 
fire and see how nearly they approach those attending the other. It will be seen 
here also that the usual precautions were taken ; and the hour and circumstances 
forbid the approach of any one from the outside ; work had ceased, and the watch- 
man was on duty in the building ; and from all of the circumstances my conclusion 
is the same; viz., that this fire, like the other, was occasioned by the use of 
benzine. 

Method and purposes served in using the article. — Lacquer or varnish is applied 
cold to the cans or tins, which have previously been filled with fish and cooked, 
tested and otherwise prepared for coating or glazing, which is the last process 
through which they pass prior to being labeled and cased for the market. 



BENZINE IN CANNING ESTABLISHMENTS. 55 

When purchased, the lacquer is thick and stands a considerable thinning, 
which, until quite recently, has been done with turpentine. Several years ago it 
was found that the more dangerous but less costly article of benzine would answer 
the purpose, and since then this has gradually come into use ; and now it would 
appear that very nearly all of the canneries have done away with turpentine. 

The lacquer of original strength is mixed with benzine in tanks, which vary 
in size ; some are about three and a half feet wide by five and a half feet long and 
twelve inches high, standing on low wheels ; and a good authority places the 
quantity usually prepared for a day's work in a good-sized cannery at seventy-five 
gallons, which would probably consist of benzine and lacquer in equal parts, so 
that we may assume that as high as thirty-seven and a half gallons of benzine are 
exposed and used from during the day ; and perhaps a goodly part remains over 
when work ceases and the building is closed. The point is, what becomes of the 
vapor from such a quantity, and would cannery owners or underwriters knowingly 
permit the use of j benzine when the clanger brought about by handling and 
evaporation is made known. 

To resume, it is further said to be the custom to mix by daylight only ; and the 
aim is to use up what is made during the day. Sometimes, however, more or less 
will lay over night, and the tank is then said to be closed by covering the torj 
with a canvas. The cans are dipped and set to drip in a frame fixed on the top 
of the tank and arranged so as to allow the drippings to return thereto. 

Next, the cars are piled up conveniently near, and allowed to thoroughly dry; 
meanwhile a new lot is commenced on ; and, if necessary, the tank is moved to 
another part of the room. 

Benzine is used because it is cheaper, costing at the present time about seven- 
teen and a half cents per gallon, as against say sixty to seventy-five cents for tur- 
pentine; but it is admitted that the difference is not nearly so great as the range in 
price would indicate, since turpentine, at double or more the price of benzine, 
would be more economical because it goes further; i. <?., less evaporation ; and it 
is to this feature of the business that I attribute the loss of two valuable properties 
within a few months. 

Underwriters are accustomed to estimate the hazard of a cannery to be the 
use of "fire-pots," or forges, steam boilers and pipes, boat repairing and some- 
times boat making, box making, or the putting of the same together, lacquer and 
lacquering with turpentine, and other features usually attending a factory or 
establishment employing a considerable number of people ; a greater hazard, 
however, than any one and perhaps all of the items enumerated, has been added, 
and no one of us knows exactly when or where it was first introduced ; it may 
now be said to have " burned itself into notice." 

The Board of Underwriters went so far some months ago as to reduce the rate 
upon canneries something like twenty -five per cent, basing their action wholly 
upon the favorable experience of previous years, and certainly without having 
before them the important feature in reference to which an active discussion has 
more recently been going on before their most important committee. 

Upon the other hand, as a class, the owners of canneries are careful, prudent 
people, and in admitting such an article as benzine upon their premises have 
undoubtedly taken several precautions ; for instance, lights are mostly forbidden 
near the tanks ; the work is done by daylight only, and it is common for their 



56 SEVENTH ANNUAL MEETING. 

supply of benzine to be kept outside of the building ; and the tank is likewise 
sometimes covered with a canvas at night ; but while due credit must be given 
for these, it is a grave question whether any attention whatever has been paid to 
the vapor which is constantly given off other than perhaps keeping the doors open 
while the lacquer is being used ; and this, I will presently show, is quite insuf- 
ficient. 

The question of safety is to them as well as to underwriters one which will 
command proper attention ; and, as this report is made between seasons, there is 
plenty of time to consider and make any necessary change in the present method 
of lacquering cans. 

I will endeavor to point out as shortly as possible why benzine and its vapor is 
dangerous. 

The danger attending the use of benzine in any form is well known to all, but 
perhaps by none better than the makers of it : and to the underwriters who refuse 
to insure it in quantities ; and by city and town authorities, by whom it is gener- 
ally discriminated against ; also to firemen, who are thoroughly afraid of it. 

Benzine is one of the distillations of petroleum ; speaking without exactness 
or reference to each and every product of petroleum, as known to scientists and 
producers, the important distillations commence with the lightest and most dan- 
gerous. First may be mentioned Rhigolene, an article used as an anasthetic in 
surgical operations ; this, one might say, is almost all vapor and hard to confine in 
any temperature. Next but one comes Gasolene, the properties and purposes of 
which are pretty well understood ; the next distillation is Benzine ; and of it, it 
is safe to say that the oil evaporates and mixes with the surrounding atmosphere 
at the ordinary temperature of a room ; next comes Naptha, and later on, Kero- 
sene; and, lastly, oil used for lubricating. To return to Benzine : it occurred to 
me that when the lacquer absorbed its quota of benzine, even up to 50 %, that 
some would claim the mixture would, as a body, hold the benzine, and prevent 
any material evaporation, and would further be safer than benzine, and, as a 
mixture, would not take fire at an ordinary temperature, the same as the original 
article. 

To test this, I procured a sample of reduced lacquer from a well-known cannery 
on the Sacramento River, and asked Fire Marshal Durkee to treat it as he would 
coal oil suspected of being below the legal " 110 " standard. 

I will explain the method of testing coal oil, and add right here, that its 
purpose is to ascertain at what temperature it will readily evaporate and mix 
with the surrounding air and ignite by a lighted match passed over the vessel 
containing same. 

The usual test for coal oil is to pour a small quantity into a cup or vessel, and 
after placing a thermometer therein, a small alcohol flame or jet is placed beneath, 
and as the temperature rises to somewhere near the degree at which the oil ought 
to " flash " or take fire, a match is lighted and waived over the cup or vessel, and 
this is done until the temperature becomes known by the oil flashing or taking 
fire from the match. 

The Fire Marshal reported that my sample of reduced lacquer acted just as 
benzine would ; that so far from requiring a flame to increase the temperature, it 
went off, or flashed without ; and, as a further test, we together poured out a 
small quantity, and it ignited readily from a match passed just above it. 



0. H. COLE'S PAPER ON STATISTICS. 57 

It may here be said, "well, anyone who would pass a match near oil or 
benzine would be foolhardy ;" but the answer is that the safety of using any oil 
made from petroleum depends upon its standing the test of a temperature well 
above that of a room, large or small, where lights or fires are in use. 

Benzine by itself, or contained in the lacquer, can be relied upon to evaporate in 
a room of ordinary temperature ; the vapor composed of four well-known constit- 
uents being heavier than common air first falls to and rolls along the floor ; soon 
after it begins to mix with the air, and will not, according to the well-settled 
laws relating to the " diffusion of gases," be very long in finding its way to any 
light or fire in the same place. // is not a question whether it is safe to bring a 
light near Benzine, as the vapor from it will seek the light. 

Naturally the surroundings largely govern in such matters ; the size 
of the room or building ; the quantity of benzine required to furnish the neces- 
sary amount of vapor ; whether the place is closed up or open ; its temperature 
and other points must be considered ; and in a paper of this kind it is difficult to 
cover the ground with any degree of satisfaction ; but it is enough to mention 
that these various conditions are likely at times to be present in the lacquering 
department of a cannery, and were probably so in the two instances herein referred 
to. Both places had closed up, and their confined cubic contents would favor a 
diffusion of vapor from the lacquer tank and from cans lacquered towards the close 
of the day. One, certainly, and probably both, had lights, banked fires or imper- 
fectly put out fires in the tin- shop; and the accumulation and passage of vapor to 
the nearest of these would cause the kind of a fire described in the testimony. 

It may be suggested that if the vapor was present in quantity sufficient to 
produce a fire, would not the watchman have observed this ? The answer to this 
is that they were probably accustomed to the smell in the lacquering department, 
and would hardly notice an increase of the odor ; and besides this, an able pro 
fessor in chemistry, to whom I put the question, was unable to say whether the 
vapor of benzine, being heavier than ordinary air, might not be present and well 
distributed over the floor surface of a room without a person walking through the 
room with his head at the ordinary height detecting its presence. 

In conclusion, I will say that in my opinion canners can continue to use ben- 
zine if extra precautions are taken ; but it is essential that the lacquering be done 
in a separate building with at least two sides or ends entirely open ; also, instead of 
having lacquer tanks' on wheels, they had better put their cans on wheels, and thus 
enhance the safety of their property by the extra handling. 

I recommend, also, that the Underwriters take such steps as will bring to their 
notice the danger and consequent risk, feeling assured that, if this is done, the 
desired remedy will be arranged for between now and the next season. 

Mr. J. D. Baily: In the absence of Mr. O. H. Cole, I have 
been requested to read his paper on " Statistics." 

O. H. COLE'S PAPER ON STATISTICS. 

To the Fire Underwriters' Association of the Pacific : — Gentlemen : In 
presenting our report for 1882, your committee crave your indulgence for any and 
all errors and omissions, begging to remind you that much work and many figures 
are necessary to the attainment of even limited results in a statistical line. 



-kS seventh annual meeting. 

To your committee of three years ago belongs the credit of originating a tabu- 
lar system, eminently well adapted to our use, which system was continued by 
the next succeeding committee, and to which, as will be observed, this committee 
lias added the requisite data for the past two years. In addition thereto we have 
arranged a comparative statement of premiums and losses of the entire Coast for 
the years 1881 and 1882. 

With no desire to dwell at length upon any particular point connected with 
these tables., we leave the whole to your careful attention, believing that the 
results as shown will prove interesting and possibly instructive. A few remarks, 
however, might not be amiss ; and we would invite your attention to a few of the 
more salient points in interest. Whilst the premium account for the State and 
city shows a gradual yearly increase, and the gross premium receipts for the entire 
Coast reveal a gain of some half a million ( which gain, however, is to a certain 
extent due to the transfer of many of the Territorial Agencies from Chicago to 
the San Francisco General Office ), yet the losses accruing under this seeming 
improvement have been augmented, not only to a very considerable extent in our 
own State, but to a very noticeable figure when is considered the business of the 
Coast, and wherein said losses are seen to exceed by nearly a million of dollars 
those of the preceding year ; or viewed in another light, the increase of loss 

OVER INCREASE OF PREMIUM IS NEARLY ONE HUNDRED PER CENT. 

The percentage of loss to premium in California exceeds by seven per cent the 
highest corresponding loss ratio during the last seven years, whilst the percentage 
of loss to premium on the entire Coast exceeds the percentage of the State nine 
per cent, and is thirteen and a half per cent greater than the ratio for the same 
territory in the previous year. 

Official returns by 148 American companies show a profit of §3,891,000, or but 
1\ % on an income of §51,879,390, in which income, however, is embraced not only 
premiums received, but interest on §131,650,000 invested funds (capital and 
surplus), which item of itself is of no small moment ; and the result shows an 
income of but 3 % on the investment. This may possibly suffice for United 
States Bonds, but is hardly adequate for insurance. It can truly be said that the 
companies have had a bad year ; yet who can say but that the present year may 
prove as disastrous in its results as was its predecessor ; for surely 1883 started 
off with a lively gait, which has thus far been well maintained, doing its full 
share in continuing the already lengthy list of disaster and ruin. 

It is the province of this committee to present certain data for your considera- 
tion ; this done, we are hardly expected to argue causes. We will therefore 
return our thanks to the " Coast Review," to Fire Marshal Durkee, to Capt. 
White, of the Fire Patrol, and to other friends, for valuable information, and 
leave cur report in your hands, in the hope that from its contents you may glean 
some little comfort and instruction, or profit, in some sense, from the results as 
shown. 



~*~' 00 
•i-H T-H 



CM 

00 
OO 

i-H 

OD 

s 
g 

s 

w 
Ph 


Per cent. I 


38$ i 




3 

o 

EH 


$ 968,397 
1,200,557 
1,869,627 

$4,038,581 


Percent. | Sc^S? | : 


'6 


t>-oom 
ocs-m 

05^ 

cCoo%** 

CO (MOO 

St 


1 

o" 
m 

00_ 

5» 


PerceDt. | g^co° 1 : 


State. 

$631,390 
671,559 
885,202 

$2,188,151 






00 
OO 

s 
g 

3 

w 
M 

Ph 


Percent. I 833 1 : 




$ 884,468 
1,168,646 
1,768,513 

$3,821/627 


Percent. | g^S 1 : 


City. 

$338,444 
512,938 
913,212 

$1,764,594 


Per cent. I cm to 3 1 ' 


State. 

$546,024 
655,708 
855,301 

$2,057,033 




g 

00 

so" 

s 

s 

Ph 


Percent. | ^^^J 1 : 


Total. 

$ 881,732 
1,064,541 
1,673,993 

$3,620,266 


Percent. ! °,&S 1 : 


City. 

$339,376 
469,070 
887,090 


CO 
ift 

OS 


Per cent. 1 cnco^ 1 • 


State. 

$542,355 
595.470 
786,903 


OS 
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5» 

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g 

of 
M 

3 

w 

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Total. 

$ 809,004 

956,990 

1,667,010 

$3,433,004 


Per cent. | ^ §§ S 1 : 


>> 


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C--COCM 

ooot> 
r-Tccfin 

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Percent. | £83 1 : 


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1 

m 


$467,125 
514,928 
761,285 

$1,743,338 




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do" 

a 

g 

a 

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Percent. | &£§ I : 


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O 

EH 


COi-H<M 
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inicToo 

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oooot^ 
i— T 
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(M 

ITS 

co" 


Percent. | 8cm£ ' : 




$404,547 
421,382 
936,048 

$1,761,977 


Per cent. | - 


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QQ 


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60 



SEVENTH ANNUAL MEETING, 



TOTAL COAST BUSINESS, SHOWING PREMIUMS AND LOSSES AND PERCENTAGES OF 
SAME OF EACH CLASS OF COMPANIES FOR 1881 AND 1882. 







1881. 






1882. 




Com pa Niks. 


Premiums. 


a 

o 


Losses. 


a 

26 
34 
40 


Premiums. 


o 
a> 

3 


Losses. 


2 

a 

2 


California 


81,190,544 
1,471,020 
2,276,763 


24 
30 

46 


§447,082 
594,988 
708,685 


$1,338,475 
1,538,261 
2,657,783 


24 
28 

48 


8559,484 

736,058 

1,424,396 


n 


Eastern 


27 


Foreign 


52 


All Companies 


§4,938,327 




$1,750,755 




$5,534,519 


.... 


82,719,938 





Percentage of Losses to Premiums, 1881, 35^ per cent. 
Percentage of Losses to Premiums, 1882, 49 per cent. 



On motion, the meeting was adjourned until 10 A. M. 



SECOND DAY. 



Wednesday, February 2 1st, 1883. 
The meeting was called to order at 10 : 15 A. M. 

The President: Gentlemen, Mr. Geo. W. Spencer, Chairman 
of the Library Committee, will favor us with a report. 

REPORT OF LIBRARY COMMITTEE. 

Mr. President and Gentlemen of the Association : — Once more we are 
called together upon this our sixth annual meeting to submit our respective 
reports and for the pleasure of listening to the addresses made by members and 
friends of the association. Your Library Committee, therefore, beg to lay before 
you a statement of their stewardship for the past year and invite your attention 
to the collection of works, which is now arranged on your library shelves, for the 
benefit of all San Francisco Underwriters. 

In 1878, on the occasion of our second annual meeting, we were first presented 
with our library by Mr. Hart, the Chairman of the Committee, who, by a judi- 
cious expenditure of the small amount appropriated for the purpose, gave us the 
nucleus, nest-egg, to quote from his report, of our present library. We all 
remember the very happy manner of his presentation. The library was small, 
his report immense ; and while from that time to the present the library has 
materially increased, without reflection upon succeeding committees, that first 
report has never been excelled. 

Among the first acts of your presiding officer last year, on assuming his posi- 
tion, was to move in the matter of providing a library to contain all works of 



REPORT OF LIBRARY COMMITTEE. 61 

reference and special interest to Underwriters. To his personal efforts your com- 
mittee is largely, in fact, principally, indebted for the results which are now 
submitted for your approval. The object sought was the formation_of an Under- 
writers' Library, containing every standard work of reference, digest of decisions, 
reports, statistics, essay and treatise on subjects pertaining to our profession ; and 
to provide a fund^ which would enable us to add to our shelves every new work as 
it was published. There was no such collection in the city, and one in search of 
information of this character referred in vain to his own dust-covered volumes on 
mantle or window sill, or visited with no better success the select and neatly 
arranged library of his more methodical neighbor. To accomplish our object, 
funds were needed, which the treasury of the association was unable to provide, 
and we were therefore obliged to call upon our friends for assistance. The gen- 
erous response TO our request is shown on the debit side of our finance account 
herewith submitted. The liberal amounts donated and the promise of further 
contributions, if required, relieved your committee of embarassment and reduced 
its duties to simply the purchase of works of most value to you, and the proper 
accounting of moneys expended and balance on hand ; and not only were we 
indebted for contribution of funds, but also of valuable reports and records, 
which were bound and presented to the association by offices which had for years 
carefully preserved them. In this connection, as we are somewhat encouraged by 
success and have thereby lost that hesitancy of manner which characterized our 
first efforts in augmenting this library, we venture the hope that, when its full 
scope and influences are known and appreciated, valuable works now in the pos- 
session of individual Underwriters, and, thereby, not generally accessible, will be 
generously donated for the benefit of all. In our intercourse with the various 
offices, and intent on the welfare of our library, we cast longing eyes upon volumes 
which are sadly needed on our not yet filled shelves, and trust that when this 
modest want, which is now expressed, meets the eyes of the unselfish possessors, 
they will promptly pass the title of ownership to this association. 

The works referred to are, many of them, out of print and not obtainable by 
purchase. The existence of them in this city is known but to few persons, and 
they are, therefore, not generally sought for or referred to. If they formed part 
of our collection and were embraced in the catalogue, they would be of benefit to 
all as works of reference. In other words, we seek to obtain from the scattered 
books throughout the different offices where they are now of no general use, a col- 
lection centrally located for the benefit of all. 

We invite suggestions from any member that will enhance the value of this 
library, and are prepared to purchase any volume that may be needed to complete 
its usefulness. We have files of nearly all the leading insurance journals, and 
believe that an inspection of our new catalogue, copies of which have been fur- 
nished every office, will show an insurance library, the want of which has long 
been felt by every member. 

The library cases, which the association purchased at different times, were 
found inadequate for our present wants, and we, therefore, had constructed much 
larger and more convenient ones, which will probably meet our requirements for 
a number of years. Some difficulty was experienced in disposing of the old cases, 
and the prices realized were not satisfactory. The fact that we were obliged to 
sell, and few wished to purchase second-hand furniture, operated against us, and 
we finally sold them for the best prices obtainable. 






62 SEVENTH ANNUAL MEETING, 

The subject of our report is not one upon which there is occasion to write a 
lengthy paper. It furnishes no theme for discussion, and calls for but a statement 
of our trust, which is submitted as follows : — 

RECEIPTS. 

Contribution S. F. Board Underwriters $250 00 

" Cal. Ins. Association 150 00 

" Messrs. Jennings & Stillman 15 00 

N. Y. Underwriters 20 00 

Sun Ins. Co 20 00 

Trans-Atlantic Ins. Co 20 00 

Mr. E. A. Halsey 5 00 

State Inv. & Ins. Co 20 00 

Le Circle Ins. Co 10 00 

Rec'd from sale of Library Cases 45 00 



Total $555 00 

. EXPENDITURES. 

Coast Review, Insurance Publications $ 87 88 

Sumner, Whitney & Co., Ins. Law Books 86 00 

A. L. Bancroft & Co. , Encyclopaedia Britanica, 14 vols., and Ure's 

Dict'y of Arts and Sciences, 4 vols 1 16 50 

Payot, Upham & Co., Webster's Dict'y 10 00 

A. J. Forbes, Library Cases, Complete 92 70 

Joseph Fredericks, Carpet Strip 3 50 

D. Hicks & Co., Binding Books 8 75 

Subscriptions, Monitor, $3.25; Law Journal, $5.00; Insurance 

Times, $3.20; Underwriter, $3.00, and 3 back vols., $12.00; 

Spectator, $4.00; Coast Review, $2,50; P. 0. Order, 40 cts. 33 35 

H. S. Crocker & Co. , Catalogues 8 50 

Balance on hand . 107 82 



Total $555 00 

In conclusion, trusting you will acquit us of any charge of boastful pride in 
our efforts, we feel that, in presenting you with this library, your committee is 
making its report in the most acceptable manner possible. 

Mr. Carpenter : I will take this occasion to express to the 
Association the regret of Mr. D. J. Staples, who cannot be with 
us on account of sickness in his family, and who intended to-day 
to present in person some volumes which he has collected for the 
benefit of the Library (presenting books) ; these are the reports of 
the San Francisco Fire Department complete from 1870 to 1882 ; 
also, the Fire Marshal's report from 1864 to 1882. The Fire Mar- 
shal's reports had to have the record of three full years written 
out in manuscript in order to make them complete ; and Fire 
Marshal Durkee kindly consented to perform that service. In 
the case of the Fire Department reports, it was necessary to hunt 
through numerous offices and obtain some of the annual state- 



FIRE DEPARTMENT AND WATER SUPPLY. 63 

ments from the Municipal Reports in order to complete the set. 
These of course are not of any interest for casual reading; but 
as a matter of reference I think they are of great use to one who 
wishes to look up statistics. 

Mr. Geo. W. Spencer: These are the only complete reports in 
the city, and they will prove very valuable to our library. On 
behalf of the Association I move that a vote of thanks be tendered 
to Mr. D. J. Staples. 

The motion was carried. 

The President: Our thanks are certainly due Mr. D. J. Staples, 
President of the* Board of Underwriters, for many acts of kind- 
ness and courtesy, extended not only during the last year, but 
during the last six or seven years. He has before this presented 
books to the Association which cannot be ■ duplicated ; we have 
now from him three sets of books which cannot be found out- 
side of this library. 

Mr. C. M. Nichols read the paper on " Fire Department and 
Water Supply," written by William Sexton : — 



FIRE DEPARTMENT AND WATER SUPPLY. 

Mr. President and Members of the Fire Underwriters' Association 
of the Pacific : — Gentlemen : Your Committee on Fire Department and Water 
Supply beg leave to offer the following as an apology for not making, as has been 
the custom of former committees, -a more elaborate report on this subject. 

The Fire Insurance Underwriter bases the rate on the hazard as made up by 
class of property or building, occupancy, exposures, force and direction of wind, 
fire department and water supply, with a liberal addition for carelessness (acci- 
dents that will but ought not to happen, and cussedness (moral hazard), thrown 
in). This we believe to be the theory of the profession ; the practice is, too often, 
that instead of additions being made for unforseen accidents, in consideration of 
our superior judgment, hope of good luck, or to take the risk from the company 
around the corner, a very liberal deduction from a proper rate is made. 

Underwriters do not make the hazard ; they only fix the rate called for by the 
hazard as they find it ; and as all reductions of hazard make a corresponding 
decrease in rates, there is no part of the premium income of an insurance com- 
pany that can be justly applied to improving buildings, removing exposures, 
putting up wind-breaks, widening streets, furnishing fire departments, or main- 
taining and managing salvage corps, or Fire Patrols, for the purpose of bettering 
risks, reducing rates, and decreasing the amounts of insurance necessary to be 
carried. 



64 SEVENTH ANNUAL MEETING. 

Fire Insurance Companies are organized to sell indemnity for loss, not 
to furnish protection against loss ; the latter is furnished by the municipal govern- 
ment, and the cost assessed on all property supposed to be benefited, whether 
the owner of such property be willing or not ; the former is paid for voluntarily 
by those to be benefited, each for his own use ; and any of such payment that is 
diverted to the use of the community at large is robbery of the careful, prudent 
citizen, for the use and benefit of the careless or hoggish person who won't pay for 
idemnity. 

A writer on this subject says: "It is for the citizen to regulate the risk 
" and for the underwriter to fix the rate." 

Another writer says : " All the elaborate process of surveying and inspection 
"by underwriters has for its object, not the prevention of fire, as is commonly 
" supposed, but the reduction of the element of risk to within certain definable 
" limits, these limits being those within which certain premium is considered to 
" be sufficient to cover the danger." 

" Putting the case very briefly, therefore, a fire insurance company is not in 
" the slightest degree concerned as to how many or how few fires are of a de- 
" structive or a trivial nature ; in fact, its sole duty is to 'measure the risk.' " 

The practice of supporting fire patrols in large cities by the insurance com- 
panies, to protect and save property, that the owner may get along with 40 to 50 
per cent insurance, instead of the customary 66 per cent, or, depending on this 
extra-efficient and very valuable arm of the Fire Department, conclude to take 
the chances without insuring, is certainly against the interests of the under- 
writers ; and while insurance men point with pride to the large amounts saved by 
the activity, energy, and good judgment of the Fire Patrol force, they must bear 
in mind that property owners have eyes and can see who gets the benefit of the 
salvage. 

We have in mind a fire in a $600,000 stock, insured for about $250,000, on 
which, owing to the good work of the Patrol, the loss was about $22,500, saving 
100 per cent for the assured and 10 per cent for the companies, and another 
where the Patrol saved 100 per cent for the assured and 75 or 80 per cent for the 
companies. 

We know of the good work done by the men of the Patrol in these and many 
other cases ; they always do good work; but we don't know the millions of dollars 
worth of property carried without insurance, or the thousands of dollars lost by 
the companies, in reduced rates, because of the good work. 

There is not one of you who cannot give from his own personal experience 
many instances of renewals of good wholesale lines lost, because of the increased 
protection in the Fire Patrol District, and who has not had its good work referred 

to as A REASON FOR THE NON-NECESSITY OF CARRYING A FULL LINE. 

How often have you been told that the stock would be covered and saved, 
the damage very light, and a lower rate had, or the other company would take it. 

How often, when you suggested the danger of fire, have you been talked to 
about as follows : " Oh, yes ! there is some danger; had a little fire the other 
" day. Straw in the cellar (or a hinged gas bracket, or something of that sort), 
" but the Fire Patrol put it out, almost before we knew it. Good thing, that Fire 
" Patrol; saves you insurance people lots of money. We don't carry near as 
" much insurance as we used to ; but, with such protection, all the money insur- 



FIRE DEPARTMENT AND WATER SUPPLY. 65 

" ance companies get is clear gain." And you go off, flattered and dazed like; 
can't quite understand it ; have to admit what he says ; don't get his risk; don't 
make any money off of him, but pay for a Fire Patrol to save his property, and 
kind of wonder why the insurance companies don't furnish more fire departments, 
they do the work so well, and save so much for them, and so much for the peo- 
ple that don't insure. 

How often, because of the Patrol, we take a large line at a low rate to keep 
up our premium income, at the expense of our neighbor company that is assessed 
to support the Patrol. 

The Fire Patrol should be supported by the municipal government like the 
balance of the Fire Department, as its existence gives a reason for carrying smaller 
lines, and an argument for rebates and lower rates, thus burning the candles at 
both ends. In addition to this, the expense of keeping it up comes from the 
companies' stockholders, -there being no rate levied for it, — really burning the 
candle at three ends, the last being the end of the candle. 

For proof of this we need only to note the number of New York companies 
that ten or fifteen years since were doing a very profitable local business, now 
going out of existence. Did they not give away protection instead of sticking to 
their regular business, — selling indemnity? 

In order to fix rates, underwriters are directly interested in knowing all about 
Fire Departments, but this interest is too often, from the custom of making dona- 
tions towards Fire Departments, giving Fourth of July lunches, and maintaining 
salvags corps, construed into the belief that Fire Departments are kept up for the 
benefit of insurance companies. 

A town, wanting a reduced rate, gets a new hook and ladder or engine. The 
agent is called on for a donation ; and a refusal on the part of his company to 
respond is put down as working against his and their interests. • 

An attempt or two at setting fires wakes up the town to the necessity of having 
a night watch, and the companies are again called on to subscribe, because they 
have so much at risk. It don't seem to be understood that the insurance compa- 
nies take and carry risks for pay, and get paid, or .should get paid, for the risks 
they carry. 

We know of a case where an insurance company hired a watchman to watch 
a building for a month, at about the cost of a year's premium. Because of the 
absence of the assured, or legal representative, notice of cancellation could not 
be served. This was an expense that would go to loss account or special work. 
As the prudent manager of the company had good reasons to believe that the 
property would be burned, he took off his policy and his watchman as soon as he 
could ; he couldn't afford to watch a $5,000 risk for 850. 

The following from an insurance journal that you probably have read applies 
so well that, in this connection, it will bear repetition : — 

" A town in one of the German states, where all the property is insured, 
"accepted a gift of a new steam-engine from an enterprising company, in con- 
" sideration of that company getting all the insurance, — an excellent trade both 
"for the company and the town; but that other company (they have them there 
"as well as here), at expiration, in consideration of the improved fire protection, 
" gobbled the whole line at 20 per cent less than the old rate. Eesult was that 
"the town, at the end of two years, was a steam fire engine ahead, and had a 20 
* " per cent reduction on rates " 



66 SEVENTH ANNUAL MEETING. 

We have this experience often at home, but, not doing insurance at wholesale, 
cannot point it out as plainly as in the foregoing. 

This matter is old, and has been argued, talked, and written against by all of 
us; yet Fire Departments are subscribed to with "mental reservations" and 
" mustn't-do-it-agains " by most of us, as regularly as the paper is handed in, 
and Fire Patrols are supported by all with as much zeal as if the very existence 
of insurance companies depended on there being no fire losses. 

It is a relief to find backbone once in a while, and to find underwriters dis- 
posed to add to the rate instead of busying themselves reducing the hazard. 

The following, from a late journal, in relation to the lumber district in Chicago, 
has the proper ring : — 

"The streets in the lumber district were blocked with piles of lumber, not 
"only so as to interfere with the movement of engines in case of fire but also 
" connecting the blocks and increasing the risk. The underwriters interested, 
' ' instead of moving that lumber, or building a wall around it, or putting a tar- 
" paulin over it, to save it and reduce the risk, gave notice that if the streets 
"were not cleared within a time fixed, the rates would be increased 50 cents. 
" The streets were cleared." 

Another case, from Cincinnati : — 

" At a fire, a lot of hose bursted, and there being no money in the hose fund, 
"the underwriters, because of their interest at risk, were called upon to con- 
" tribute. Instead of doing so, they answered that they adjusted their rates to 
"the hazard, and that if new hose was not supplied, rates would be raised 
" from the first of the next month." The city bought new hose. 

This, from our level-headed friend Carpenter, states the matter much better 
than your Committee could hope to : — 

' ' The Bitter Root ford was dangerous. Its swift currents and treacherous sands 
' ' had caused the loss of much property and numerous lives. So a calculating 
"sober-sides, who had rightly argued that a ford so dangerous would be gladly 
' ' avoided by many travelers, if a ferry were convenient, stretched a heavy cable 
' ' across the river, and attaching his boat thereto, commenced transporting teams 
" and passengers. 

"The price charged was such as most travelers thought they could afford to 
"pay rather than "take the chances" on the ford; but there were some who 
"always complained that the rates charged were too high, and who regarded the 
' ' ferry as an imposition that they would not endorse by their patronage. 

' ' As the surrounding country became more populous, the travel across the 
' ' river, both by ferry and ford, increased, and the accidents became more numer- 
" ous. It was, therefore, proposed to build a bridge, and a subscription paper 
" was circulated for signatures. Various small amounts were entered against the 
"names of those who were obliged to occasionally cross the river, and then a 

" COMMITTEE WAS APPOINTED TO WAIT UPON THE FERRYMAN. Bis attention was 

" called to the public spirit of the hundred or so who had subscribed one-half the 
" required amount, notwithstanding that they did not cross the river more than 
" two or three times per year. As he crossed more times annually than all the 
" others put together, the committee thought it no more than fair that he should 
" subscribe for at least that half of the cost of the bridge which still remained 
" unprovided for. The ferryman had to admit that the 'crossing' was a danger- 



FIRE DEPARTMENT AND WATER SUPPLY. 67 

1 ' ous one, and that he himself had suffered severely by reason of floods and float- 
" ing ice, that had carried away his boats and broken his cables. ' But,' said he, 
" 'if these accidents multiply I can increase my tariff of charges, and thereby 
" make myself whole on the business, while if the crossing is made safe by the 
" building of a bridge, not even the most ardent admirer of a "life on the ocean 
" wave " will patronize my boat, and my occupation will be gone.' ' No ! gentle- 
" men, I am sorry to say that my business interests do not permit my endorse- 
" ment of your public spirited movement ;. but if you want to scatter ten-ton 
1 ' boulders promiscuously around in the stream above and below the ferry, and 
" explode dynamite in the bed of the ford, I am with you every time.' " 

And the disappointed committee went away disgusted at the stupidity of a 
man who would not aid a-great public improvement, even when it was " directly 
' ' in the line of his own business. " 

In small, ambitious, high-rated towns, the new hook and ladder truck and 
buckets attached are shown to the special, and the good work done by the com- 
pany tearing down a shed in the edge of the town set forth to show why the rates 
should be reduced ; or the old tub brought around the Horn in '49, that went 
from No. 6 in San Francisco to No. 2 at Sacramento, then to No. 1 at Nevada, 
and having outlived its usefulness in these places (they having been built of brick 
don't need so good a " masheen ") is pointed out as the savior of the town and 
the right arm of the insurance companies in robbing the citizens. ' ' Rates must be 
reduced or no business," is the slogan of the town. The agent, not having much 
experience in fires, and fully believing in his Fire Department, joins in the hue 
and cry for low rates with as much honesty and zeal as he used in getting his 
companies to subscribe towards the new Fire Department, and shows quite as 
much disgust at the special who refuses to back him up for a reduction of rates 
as he did at the company that had backbone enough to refuse to furnish a Fire 
Department. 

No use for the special to suggest that the apparatus will be cared for for a 
while ; but if, when the fire does come and it is needed, the truck is not stuck 
away in some back yard, the ladders loaned to the town painter, and the buckets 
gone, it is likely to be where the fire starts, as at Fresno, and get burned, or at 
Colfax, where the '49 tub was in the lake, useless, it having performed its office 
of getting companies to insure a frame town at board rates, reckoned on the 10- 
feet 6-inch open space table. Telling him of the large number of useless fire 
machines found in small towns don't make an impression ; his town Fire Depart- 
ment is not of that sort. 

In small cities having Steamers, and in some cases, Paid Fire Departments, an 
allowance must be made for want of continuous practice on the part of the men. 
We are often called upon to explain why San Jose, Stockton, Sacramento, Los 
Angeles, and Portland, with their good water supply and excellent Fire Depart- 
ments, are rated higher than San Francisco, and have to quote the furniture 

store fire at — , where the fire damage was about $500, and the water 

damage about $13,500, where, in the language of one of the adjusters, water was 
thrown everywhere and on everything except the fire, or where the fire was ; this 
was because the smoke was so thick that the fire couldn't be found, and they 

had to put the smoke out first ; or the dry goods fire at , where the 

ambitious fireman wanted a premium for getting on first water, through a 



68 SEVENTH ANNUAL MEETING. 

sky-light, and at least thirty feet from the fire, causing a water damage of about 

$3,000 to a lot of silks ; or a fire at , where a company had to replaster 

the adjoining building ; the Local Agent, in reporting the loss, said that there 
was no fire in this building, and but little in the other ; but the firemen had to 
throw water somewhere. You gentlemen know enough cases of this kind to fill a 
volume. You know that not only fire engines and water are wanted, but practi- 
cal experience is also needed. A steamer is very good, if not used as at , 

with Puget Sound for a water supply, where it was run overboard in the excite- 
ment ; and the excellent water supply became a cause of disaster. 

To fix a rate we should know the fire protection the risk or locality has, and 
the value of that protection, and thus far are interested in Fire Departments. 

In no place does the old saying that " an ounce of prevention is worth a pound 
of cure," apply as well as to stopping fires ; a bucket of water at the start may 
be worth an ocean an hour later. 

In ordinary frame, or frame and brick towns, up to 2,000 population, where 
water does not often freeze, a bucket brigade does best service ; buckets to be 
made of galvanized iron, to hold about three and one-half gallons each, making 
the weight of a full bucket not over thirty pounds, the buckets to be kept filled, 
and placed on shelves about four and one-half feet from the ground, or sidewalk, six 
in a place, and not over seventy-five yards apart ; eight dozen buckets, filled, and 
placed in this manner, would be available in a fire in center block, or eight 
barrels of water of forty gallons each, inside of sixty seconds. This makes some 
allowance for waste. The value of this much water early in a fire, in one of our 
towns that can burn down inside of thirty minutes, cannot be estimated. 

In the excitement of a fire a man may forget to set fire under a boiler, may 
forget to screw on the hose, may lose his wrench, or by other accident delay the 
working of an engine until too late ; but any one can shoot a bucket of water 
straight, or if one should miss, the other 95 would be in, and, before the last 
bucket was emptied, lines would be formed. 

For water supply, troughs like ahorse trough, or barrels, and pumps or supply 
pipes, are best, as the water carriers can dip and run. 

For towns over 2,000 and up to 10,000, volunteer companies of hook and 
ladder, hand engine, and steamers, in addition to the bucket brigade, are useful, 
but should be a separate organization from the bucket brigade ; and if the latter 
is kept up, the former won't have much to do. 

In towns of 10,000 and over, paid fire departments are best. 

The experience with ordinary private fire departments in hotels, theatres, 
large dwellings and manufacturing establishments is such that it is a common re- 
mark among underwriters that companies would be justified in raising rates, unless 
the assured will agree that the private fire department shall not be used in case 
of actual fire, if the general fire department is within reach. 

This opinion of private fire departments does not apply, however, to the excel- 
lent systems of protection in use in manufacturing establishments in the cotton 
and woolen mills East, which system not only includes water supply and appa- 
ratus, but the " ounce of prevention," in the mode of building. 

We have numerous examples of very large losses caused by trying to stop a 
fire with the private fire departments without calling in the general department; 
a few of the notable ones, — the Field, Leiter & Co. store in Chicago, a few years 



FIRE DEPARTMENT AND WATER SUPPLY. 69 

since, and the sugar refinery at Philadelphia last year. The later ones are the 
Wilson Nob Hill residence, reported in Coast Review of December, 1882. 

From the report it appears that on each floor there was 25 to 30 feet of 2-inch 
hose attached to the water pipe. Smoke was discovered at 7:30 A. m., but the 
servants relied on the hose and did not turn in an alarm until 10:40. By hard 
work with the full force of the department the fire was, by 12:30 P. M., under 
control. The Coast Review comments as follows : — 

" Their ill-advised reliance upon this household apparatus for the extinguish - 
11 ment of fire resulted in ten times the amount of damage that would have 
"occurred bad the Fire Department been summoned at the first indication of 
' ' danger. The main point, however, which we wish to call special attention to, 
" in this connection, is the fact that the reliance placed on the household arrange- 
" ments for extinguishing fires was not only misplaced confidence, but resulted in 
' ' a heavy loss. The house hose was of no more use to overcome the fire than a 
" syringe and a glass of water would have been." 

Want of space prevents copying more of that article. Read it ! 
The burning of the Park Theater in New York, a short time since, is referred 
to in the insurance journals as follows : — 

" The old story is again rehearsed of defective private fire extinguishing appa- 
" ratus, and nobody at hand competent to work it, had it been ever so good. The 
" fire alarm boxes were out of order, and failed to work. Reliance was at first 
"had upon the fire apparatus belonging to the theater, and this failing the alarm 
' ' was turned in for the regular Fire Department. Thus valuable moments were 
1 ' lost. 

" It is claimed that this theater was splendidly equipped with the means for fire 
" extinction ; but, as usual, when these means were required to be put in service, 
" there were no men present to handle them." 

Yet we presume a liberal deduction had been made in the rate of insurance 
because of this unavailable fire apparatus. This is another illustration of the 
fact that fire apparatus located within the building to be protected is simply a 
snare to catch insurance gudgeons. The sooner companies stop the practice of 
reducing rates because of such appliances the better it will be for them. 

" The employees tried to put the fire out themselves ; but their fruitless efforts 
' ' were another demonstration of the little value to be placed on private fire 
" extinguishing facilities handled by undrilled and inexperienced men." 
Another journal says, on the carelessness of the human species : — 
"Fire is a fresh subject in the public mind. Even the most careful people 
" sometimes grow slack in their exercise of precaution. There are times when 
" even a good housekeeper will forget to bait the mouse-trap-; shutters and doors 
"are often left unbarred. When fire does not for a longtime break out in a 
" building, people forget to see if the hose is in place, the water connections in 
" running order, and the telegraph instruments in such condition that they will 
" convey an alarm. If they only knew when the flames were coming; but they 
"don't." 

For hotels, theaters, and manufacturing establishments, preference should be 
given to buckets and troughs or tubs. The time lost in getting the hose out of 
the rack, and the chances of the operator turning the faucet lever once or twice 
around in the excitement, often loses time that would not be lost if dependence 
were had on buckets only. 



70 SEVENTH ANNUAL MEETING, 

In manufacturing establishments of two or more buildings, not connected, 
steam pumps, hose, hand engine, or other power or pressure, private lire depart- 
ment is of value, in addition to buckets, to keep the fire from spreading from one 
building to the others. 

In making up a proper rate, the height of buildings must not be lost sight of ; 
as in the large cities buildings are being so constructed that the upper stories have 
about as much protection from the Fire Department as a building in Deadwood or 
Tombstone had when the water works were finished, and the " water expected" 
the next week, and should be rated accordingly. 

High buildings also make a stronger draught, making the fire burn fiercer, 
and requiring a better Fire Department than lower buildings. The high buildings 
outgrow the Fire Department, and is a hazard that needs careful figuring. 

The introduction of power elevators makes the upper stories quite as comfort- 
able and as easy of access as the lower ones ; and to such an extent has the high 
building craze run, that some of the oldest and most conservative Fire Insurance 
companies have the upper portions of their modern buildings away out of the 
reach of the Fire Department. We presume, however, that they are fire-proof, 
and not insured ; or, if insured, the insurance is at rates without deduction for 
fire department. 

The interest of insurance companies in improving the risk to make it better 
for them and at less rate for the assured, according to the popular idea of 
agents and assured, is best illustrated by the agents' settlement of a couple of 
small losses, one in each end of the State. 

A small damage to a church, caused by stove-pipe through the side wall, not 
over $5, was settled by the agent by repairing the damage and building a nice 
brick flue, at a cost of $25, making a total of $30, — $5 for loss and $25 for pro- 
tection. The company paid about two years' net premium to improve the risk 
and reduce the rate 75 cents. The agent supposed that this was right, as the 
company had $1,000 at stake, and could afford to pay $25 to protect it. His 
reasoning would have been correct if the company could have collected that 75 
cents for a stove-pipe until the building was destroyed by time or fire ; but hav- 
ing a brick flue, the rate was promptly dropped to the basis. 

The other was a stove-pipe damage to a school-house, in the settlement of 
which the agent pointed out to a visiting special, with no little pride, how he 
fixed up the damage and put in a Terra Cotta flue, at the company's expense, to 
make the risk so much safer for the company ; and that his general agent had en- 
dorsed the settlement, and said it was all right. 

These agents, like too many of the insurance fraternity, only got protection 
and indemnity mixed. 

Your Committee, on submitting their views on this subject, do not wish to be 
understood as favoring a poor fire department as against a good one, or that there 
can be any objections of any sort to insurance companies helping to build up and 
support fire departments or fire patrols, other than the fact that there is no rate 
charged the assured for this expense. 

^ Mr. Tom C. Grant :— 

Mr. President : Although a member of this Association since its organiza- 
tion, this is the first meeting it has been my pleasure to attend. The exercises 



REMARKS OF MR. TOM C. GRANT. 71 

yesterday were very interesting, and in your remarks, on the various papers 
read, you expressed a hope that members would criticise and discuss subjects as 
they came up ; this is my apology for occupying your time. 

A gentleman, in a friendly argument, once facetiously remarked, "My dear 
fellow, I deny your allegation, and defy the allegator ;" so say I now to the 
Chairman of the committee whose very interesting paper has just been read. 
You all know that I have taken an active interest in our Fire Patrol since its 
organization; and to this point I now desire to make a few remarks. 

Some thirty years ago, a small, primitive hand-cart was seen in New York, 
called the " Salvage Corps," the object being the saving of life and property. A 
few years later a one-horse wagon was found necessary for their work. Still later 
on a two-horse wagon was built expressly for their use ; a house was secured to 
shelter men and apparatus in what is now known as the Dry Goods district. 
Still later, they found that one wagon was insufficient, and the second house was 
started. A few years after a third. About four years ago a fourth house was 
established, as far north as Nintieth street ; and I am told that the Directors are 
seriously considering the propriety of establishing a fifth house still further 
north. It is unnecessary to add that the insurance companies doing business in 
the City of New York regard their investment as first-class. 

About thirteen years ago, a handful of underwriters in Chicago, recognizing 
the necessity of self -protection, tried to establish a fire patrol system there. At 
first they met with very poor success ; a few enthusiastic men, of whom Gen. 
Drew was a leading spirit, solicited contributions from private individuals, and 
also contributed from their own means towards its support. About this time the 
Chicago fire occurred, and the patrolmen worked unceasingly for about 48 hours. 
It is impossible to estimate the number of lives rescued and amount of property 
saved on that memorable occasion, and unnecessary for me to state that, from 
that date, the Chicago Fire Patrol found a warm spot in the heart of every in- 
surance man, and that Gen. Drew and his friends experienced no difficulty in 
obtaining funds for the maintenance of the organization. Private individuals 
stepped forward and erected a handsome house for the Patrol, in the business 
portion of the city. A few years later a second house was established in the 
western part of Chicago. 

About eight years ago a Fire Patrol was agitated in this city. It had a few 
enthusiastic advocates, others were luke-warm, and others still expressed the 
thought that it would not pay. We, however, succeeded in establishing, what 
was desired, a patrol for the protection of life and property in this city. For 
several months it was contended that our outlay was a useless expense : we hoped 
and prayed that it would prove so ; but I am pleased to state that it did not prove 
a useless expense. 

I desire to state right here, that I learned, a short time before this meeting, 
that remarks would be made discouraging Fire Companies patronizing fire patrols, 
and, with the few moments at my disposal, I made the following figures : Our 
Fire Patrol started here in March, 1875. Its first active service was on July 30th, 
1875, at the ' ' Bay City Sugar Refinery ; " most of us remember that fire. I was 
selected, in company with two other gentlemen, to act as adjuster for all com- 
panies in interest. We found that our Fire Patrol had done some very efficient 
work. After our labors were completed, Mr. Meyer, Secretary of the Bay City 



72 SEVENTH ANNUAL MEETING. 

Sugar Refinery, stated that they had made a careful calculation, and that in their 
opinion $65,000 was a low estimate of the amount saved the underwriters by the 
Fire Patrol. 

In August, 1878, on a Saturday evening, at about half-past 7 or 8 o'clock, a 
frre was discovered in the roof of Messrs. Murphy, Grant & Co's wholesale dry 
-nods store, on the northeast corner of Bush and Sansome streets. The alarm 
was turned in, and the Fire Patrol was the first on the ground, the men working 
with an activity that was delightful to witness. Captain White pressed every 
man into service that he could possibly obtain; every cover owned by the Patrol 
was spread on that occasion. Tons of water were thrown on the fire ; — the store 
was deluged from roof to cellar. The following Monday morning Mr. Dornin, 
Mr. Garness and myself were selected a committee of adjusters for all companies 
in interest. Suffice to say, the loss was adjusted for $40,000. After the prelim- 
inaries had been arranged, Mr. Dean, a partner in the concern, stated: " Gen- 
tlemen, I desire to congratulate you upon the efficient service rendered by your 
" Patrol. Your men did nobly ; but for their activity, we would have called on 
"you for $400,000 instead of $40,000." They had a stock of over $1,000,000, 
with over $750,000 insurance. 

Adjoining the Murphy, Grant & Co. building is the wholesale establishment 
of Messrs. A. B. Elf elt & Co. , which was filled with smoke. But for the thought- 
ful care of Captain White in opening windows, front and rear, and drafting out 
smoke, we should have had a large loss to pay there. It is unnecessary to state 
that, had the smoke been allowed to remain in that building over night, the loss 
to the underwriters would have been very heavy. 

On January 14, 1883, a fire occurred corner of Bush and Kearny streets, the 
first floor and basement being occupied by Michalitschke Bros., with a large stock 
of cigars and tobacco. The Patrol was called out on a "still." The men found 
the smoke so dense on the ground floor that they were obliged to crawl on their 
hands and knees from the front to the rear in order to get at the shutters in the 
rear. Windows were opened, a watch put on duty, and the following morning 
not a vestige of damage from smoke appeared. There was $40,000 insurance 
upon that stock. We all know how sensitive fine cigars and tobacco are to smoke, 
and can, perhaps, estimate at least a 25 per cent salvage to the underwriters by 
the Patrol. 

A few days ago (the 14th of this month) a fire was discovered in the residence 
of Mr. W. J. Callingham, a member of this Association ; the Patrol was called 
out on a " still," the mantel and grate taken down, and the fire extinguished with 
a slight damage of $50. I inquired of Mr. Callingham this morning, ' ' What 
" would have been your loss had the Fire Department gone into your house?" 
He replied, " I wouldn't have taken $1,000 and had a stream turned in." 

These are but a few of the hundreds of instances I could cite which would 
tend to show the great benefit the Fire Patrol is to us insurance people. 

The argument made by the Chairman of the Committee on Fire and Water 
Supply, that the rates of premium are reduced in consequence of the main- 
tenance of a Fire Patrol, I am hardly prepared to admit. In 1875 (when our 
rates of premium in San Francisco were at least 20 per cent higher than they 
were in 1882), our premium receipts, as per returns made to the Fire Patrol, were 
$1,677,335 61. In 1882 the receipts were $1,850,429 75. 



REMARKS OF MR. TOM C. GRANT. 73 

The expenses of the Fire Patrol for the past eight years have been $181,976.84, 
or an average outlay of $22,747.10 per year. 

There is another suggestion in your Committee Paper, — "that the Fire Patrol 
should be turned over to the Municipal Government." This does not meet with 
my approval. Just why it should not be governed by our City Fathers, it is 
perhaps hard to say. Still, I think I can advance this argument without fear of 
contradiction, viz. : That the average tax-payer will cheerfully consent to have 
a portion of the City funds expended in the maintenance of a Fire Department as 
a protection against a general conflagration, but he will decline to contribute one 
cent to save life or property of a friend or neighbor. We all know from personal 
experience that institutions governed by political cliques are frequently unsatis- 
factorily managed. Perhaps the gentleman does not recognize the fact that one 
of the chief requirements of a member of the Patrol is strict honesty and temper- 
ance. If the patrolman felt that he was liable to be "an out" upon the change 
of the municipal officers, we could hardly expect him to take the same interest in 
our institution that he now does, — feeling assured that his present position is 
secure to him during good behavior. 

Our friend, the Chairman, has had considerable experience in local politics, 
and perhaps will understand why it is that underwriters generally don't believe 
in turning the management of the Fire Patrol over to the municipal government. 
I think in the light of the experience of our friends in the East, where for thirty 
years this question has been agitated, and they have decided the management of 
the Fire Patrol should be under the immediate supervision of the underwriters, 
that we should be content to follow in their trail, and agree that the money 
expended by the companies for the protection of their own interests is legitimate, 
and one that should be cheerfully paid. 

I don't believe that there is a single stockholder in one of the companies rep- 
resented on this Coast but who will admit that the small pittance his company 
contributes every year for the maintenance of the Fire Patrol is money well 
spent. (Applause. ) 

Mr. Wm. Sexton : Then it would be better for us to go into 
the fire patrol business. My theory is that we furnish indem- 
nity ; it is no part of our business to put out fires. 

Mr. Brown: I think the burden of the argument made by 
the committee is, that anything that tends to reduce the volume 
of premiums or income of the insurance companies is a blunder 
and a mistake. 

Mr. Sexton: I say the insurance companies paying for it 
make a mistake. 

Mr. Brown : — 

Well, paying for anything that wall reduce the volume of premiums, then that 
is a blunder. Now, I think, sir, that any one who has been engaged for years in 
the insurance business, and given attention to the subject, must see that anything 
that tends to make our business less of a gamble and more of a certainty is bene 



74 SEVENTH ANNUAL MEETING. 

ficial. It is better for us to accept $50 on a given line where we are confident 
there is no risk, except from purely accidental causes, than to accept $100 where 
it is subject to great hazard. It is a much better policy to do business in San 
Francisco at the low rates that prevail than to write in Bodie or Candelaria at 
the tenfold rates obtained there. I think it is wisdom on the part of the insur- 
ance companies to pay for the support of Fire Patrols, because the Fire Patrol as 
an auxiliary to the Fire Department tends greatly to reduce the annual loss, and 
makes the certainty of profits very much greater. They make our business 
more of a science than a gamble, and I don't believe in the idea that anything 
that tends to reduce the volume of premiums is a mistake. The stockholders are 
interested a great deal more in dividends than they are in the figures of the gross 
income. The rates of insurance may be reduced by the existence of the Fire 
Patrol, but it is very certain that the net income of the companies is greater. 
Our friend refers to the bad experience of the New York companies, but he does 
not know whether that is the effect of the Patrol or not. I think there is no 
question about it ; if he will, he can satisfy himself that it has nothing to do 
with the Fire Patrol. The New York city companies have had very disastrous 
years, because many of them write a large amount of country business without 
having agents or surveyors, and it is that business probably which has led to the 
losses, and not the business in New York city. I would like, Mr. Chairman, as 
a test of the sense of this meeting, to make this motion, — 

Resolved, That, in the opinion of this meeting, the maintenance of Fire 
Patrols at the cost of the insurance companies is a mistake. 

The President : I wish you would withdraw your motion 
until after the discussion. I am indebted to Mr. Sexton for this 
discussion, and I hope other gentlemen will have something to 
say; and if you will kindly withdraw your motion for the 
present — 

Mr. Sexton: I think as much of the Fire Patrol as the 

gentleman does ; but I don't believe in the general principle that 

the companies should pay for it. 

Mr. Dornin: — 

I am sure that the members of this Association will agree with me in the 
statement that the magnitude of the services of the Fire Patrol of San Francisco 
scarcely needed the admirable defense made by Mr. Grant. The services are 
certainly of incalculable value, and we are, individually and collectively, proud 
of our Fire Patrol ; but as Mr. Grant spoke, it occurred to me that what may be 
termed the "unwritten statistics" of the business might have an important 
bearing on the subject. I would not for a moment vote to suspend the Fire 
Patrol, or abate, in any degree, my opinion as to the efficiency and worth of the 
service — indeed, I believe it might be extended ; but, in estimating its worth, do 
we take into consideration the possibilities, that the loss of premium income, 
lost to the Companies because of the efficiency of the Fire Patrol, — whose effi- 
ciency is as well known to the property-owner as to us, — is a very considerable 
item in estimating the worth and value of the Fire Patrol to the Underwriter. 



REMARKS OF MR. DORNIN. 75 

This item, and the probable additional loss or damage which would have occurred 
if the ready and efficient Patrol were not at hand, are what I have termed the 
unwritten statistics of the business. 

That the well-known efficiency of our Fire Department and Fire Patrol has 
measurably reduced the amounts of Insurance which our property-owners carry, 
will, I think, be admitted ; we had an illustration of this last week in connection 
with the attitude of the Spring Valley Water Company, when they notified the 
community of their intention to turn off the water from the City mains during 
certain hours of the day and night. In an interview with the reporter of one of 
the City papers, Mr. Montague, one of our largest property-owners, is reported 
as saying, that if the thing continued, and the Company persisted in their course, 
he should be obliged to increase the amount of Insurance on his stock. 

A few years ago it was my province to act as one of the Committee of Ad- 
justers of the loss of Holbrook, Merrill & Co. The Patrol did excellent work 
there, but the salvage was of little service to the Companies ; for that firm was 
carrying something less than $300,000 Insurance on a stock of double that value, 
and the damage by fire and water, principally water, was within, I think, $1,400 
of the total amount of Insurance. On such a stock, there should have been at 
least 75 per cent insured, and would have been if the shrewd gentlemen of that 
firm had not been furnished by the Insurance Companies with trained men and 
fleet horses to carry covers to protect their stock. 

Now all this brings me again to the point, whether the loss of premium 
income to the Companies during the past seven years, since the Patrol was 
organized, is not a very serious item. I believe the annual revenue is about a 
million and a half of dollars. Let us suppose that the illustrations given by the 
cases of Montague and Holbrook & Merrill are fair examples, and we can safely 
estimate that 33J per cent more would have been carried by the Companies, or 
rather the revenue would have been 33J per cent greater ; we should then have 
had at least three and a half millions more revenue ; what the additional losses 
may have been to offset this, we may only conjecture. This, I understand, is 
Mr. Sexton's idea that the Companies have been furnishing protection, when 
they should have been selling indemnity. While my relations are very intimate 
with Mr. Sexton, I was not aware, until I heard the paper read to-day, how he 
intended to treat the subject ; I apprehend, however, that his paper was not so 
much intended for the local as for the general market ; to get something to place 
before the Country Agents, who are constantly being urged by their neighbors to 
make demands upon their Companies for assistance for fire departments ; it is the 
experience of every Agent, every Special Agent, that we are constantly asked to 
contribute to fire departments, in the shape of new hose, ball tickets, or contribu- 
tions to their tournaments, etc., on the plea that, as the Companies have so much 
at risk, they have a large interest in such improvements. The illustration in Mr. 
Sexton's paper, of the Company which secured the entire Insurance of a German 
town in consideration of paying for a fire engine, and the next year lost the 
Insurance by being underbid by another Company, because of this very fire 
engine, has its illustrations nearer home. The facilities we pay for are made the 
excuse for reduced rates, or the cause of reduced lines. I believe in the idea, 
that we should educate our Agents to the point that we do not furnish protec- 
tion ; that we measure the risks as we find them, and sell indemnity accordingly ; 



76 SEVENTH ANNUAL MEETING. 

that the town which neglects to protect itself against the contingency of occa- 
sional tires must pay more for the indemnity w T hich the Companies are organized 
to sell ; we grade out tariffs of rates on this principle, according to the construc- 
fcion of the towns and facilities for extinguishing fires. 

This is the position which the underwriters should have assumed in 
the recent crisis growing out of the controversy between the Water Company 
and the Supervisors ; as citizens, they might properly have urged the contestants 
to temperate measures ; as underwriters, having large interests at stake, their 
duty was to ask the Water Company to refrain from a course which would expose 
their vast interests to serious conflagrations ; failing in this, to measure, if pos- 
sible, the additional hazard, and increase the rates to cover it. 

Mr. C. D. Haven : As the argument on this question 
promises to be extensive, I suggest that the discussion of this 
paper be referred to one of the regular meetings, particularly as 
we have a number of papers yet to read. 

Mr. C. Mason Kinne : While I realize the importance of dis- 
cussion, and believe that agitation is the only means of reform, 
yet we have other matters to listen to ; the usual course adopted 
in regard to papers should be followed, and no motion, such as 
Mr. Brown offered, should be entertained. I hope he will with- 
draw the motion. 

Mr. T. C. Grant : If necessary, I will apologize for speaking 
to this subject; but in conformity with the suggestion of the 
President, that papers were for discussion, I felt it was the 
proper time. 

Mr. E. Brown : I withdraw my motion. 
Mr. T. C. Grant :— 

The President remarked yesterday, in his address, that we are acting as the 
servants of the corporations. I think we are carrying out their ideas in employ- 
ing the Fire Patrol ; the stockholders agree that it is a great saving to them. In 
my statement of the Murphy, Grant & Co. fire, I said that Mr. Dean had re- 
marked to us "that the Patrol had saved between $300,000 and $400,000 to the 
if underwriters " not to Murphy, Grant & Co. 

To the statement that parties are generally reducing their lines on stocks be- 
cause of the. Fire Patrol, — I don't think this is generally the case. I know in 
one or two instances parties have said to me, "Your solicitor called here to obtain 
"aline of insurance. I told him I didn't want it, because the Fire Patrol helped 
" me out ; but the fact is, my stock is reduced." 

Mr. Watson, manager for W. & J. Sloane & Co., the leading carpet house in 
this city, recognizes the efficiency of our Patrol. He stated to us that his firm 
carried 90 per cent insurance on their stock, notwithstanding the Patrol is 



REMARKS OF MR. TOM G. GRANT. 77 

directly in the rear of their store-building ; that the rear shutters of their store 
were left open overy night, by his orders, that, in event of fire, our Patrol boys 
might be first on the ground to extinguish it. 

I believe that if Mr. Sexton had had a little more City experience, he would 
recognize the efficiency of a patrol force, and be willing to acknowledge that the 
amount expended in maintaining such organizations is but nominal in comparison 
with the property saved. 

There was a slight fire, the other day, in a wholesale millinery store, $23,000 
insurance on a $25,000 stock. The store was opened by our Patrol force, windows 
opened front and rear, smoke drafted out ; next morning there was not a vestige 
of a claim — none was made by the insured. 

We have had similar experiences upon many occasions. 

Had I known in time that this paper was coming up, I should have taken 
more pains to controvert its statement. 

I hope that the members of the Committee will accept my criticism in the 
same kindly spirit it is made. 

The President : Gentlemen, this meeting is for just such dis- 
cussions ; and if there is another gentleman who has anything to 
say, I am sure you will listen to him, no matter how extreme 
his opinion. I am more than pleased to hear this discussion, 
and to know that the paper has called it forth. It is the first 
discussion we have had ; and although your time is valuable, if 
any one has anything to offer, now is the time to do it. 

Mr. E. W. Carpenter: I understand Mr. Kinne's point to be, 
that we have so much work to get through that we won't be 
able to finish, unless we go on with the regular business. 

The President : I will detain you one moment. A few years 
ago the height of buildings in San Francisco was confined to 
two stories ; now we have five-story buildings, and we don't 
know where they will stop. The following is cut from the New 
York Graphic : — 

"There is no doubt that if a fire should gain any headway in any one of the 
many tall apartment houses to be found all over this city, the means at the 
disposal of the Fire Department for rescuing the inmates would be found lament- 
ably inadequate ; and it is therefore not too soon to undertake the organization of 
a life-saving corps. In connection with s'uch a corps it would, however, be ad- 
visable to limit the height of all buildings erected for dwelling, manufacturing or 
office purposes. Not only are these sky-scraping monsters, which are becoming 
more numerous almost every day, extremely unsightly, they are also the greatest 
menace to the lives of those who occupy them. There is absolutely no limit to 
the distance that a man may run a structure up into the air in this city, — some- 
thing that cannot be said of any city of any size on the European continent. A 



78 SEVENTH ANNUAL MEETING. 

building should never be so high that the upper story is out of reach of the 
ordinary fire department appliances. The height of a fire ladder that is safe and 
can be raised in a few moments should be the limit of the height of ordinary 
buildings." 

The Vice-President takes the chair, and Mr. Geo. F. Grant 
reads a paper prepared by T. C. Van Ness, called " Suggestions 
Upon the Insurance Contract." 

Mr. Grant : In order to make the proceedings as interesting as 
possible, we called upon Mr. Van Ness for a paper. I chose him 
from a number, believing he had most successfully met the issues 
of the legal part of fire insurance in the courts. He addresses his 
paper as follows : — 

San Francisco, Cal., February 15th, 1883. 

George F. Grant, Esq., City: My Dear Sir, — I have before me your favor 
of the oth instant, requesting me to put into a formal communication certain 
views relative to litigation arising out of contested insurance cases, which I have 
at various times taken occasion in private conversation to express to you. I am 
not aware that there is anything of special value in what I may have suggested to 
you ; but being the result of some reflection based upon actual experience in this 
class of litigation, and being deemed by you at least worthy of notice, I shall 
here endeavor to dress those views in such form as to merit your attention. 

There are three facts, of which every person familar with the business of insur- 
ance is cognizant ; to wit, — 

1st. A prevailing prejudice, which renders it impossible for an insurance 
corporation to obtain a fair trial before a jury in a contested policy case. 

2nd. , A prevailing, although erroneous, impression among a large class of 
people that insurance companies never pay a loss if there be any possible means of 
escape from such payment. 

3d. The ignorance existing among the assured, as a class, of the nature of the 
insurance contract, notwithstanding its almost universal use. 

Stating these three propositions inversely, it would seem, — 

1st. That the large proportion of our people who are daily entering into this 
contract of insurance are really ignorant of its nature, scope and effect. 

2nd. That notwithstanding the large amounts paid out annually by the insur- 
ance companies in settlement of their losses, and the very few cases in proportion 
to the losses occurring which are taken to the courts, still an impression prevails 
among the very class whose sources of information should teach them otherwise 
that the companies pay only when unable to devise excuses not to do so ; and — 

3d. Growing apparently out of the ignorance upon the two points last stated 
is the prejudice existing among juries against the insurance companies. 

The three propositions above stated necessarily arrest the attention of the 
thinking man. I have stated them twice, in a different Order, and for this reason ; 
the order in which first stated is that in which they naturally attract attention, — 
that in which last stated is, in my opinion, the logical order in which they must 



SUGGESTIONS UPON THE INSURANCE CONTRACT. 79 

be considered, to arrive at a true solution as to what is cause and what effect ; for 
these somewhat phenomenal facts or effects have unquestionably an antecedent 
cause. That cause being once intelligently recognized, it might be possible to 
point out a remedy, a result, I apprehend, to be wished for by those engaged 
in the insurance business. The first effect noticed, and which at once demands 
explanation is, interrogatorily stated, Why is it that juries, forgetting the sanc- 
tity of the oath which they take to fairly try the issues presented to them upon 
the evidence, take the bit in their teeth, ignore the evidence and law, and give to 
every plaintiff all that he asks ? That juries generally do this is well under- 
stood by every one familiar with insurance litigation, and so well recognized is 
this fact, that insurance companies, when sued, look to the Supreme Court of the 
State as the real tribunal from which they must expect justice ; from juries and 
the lower courts they expect none. And this is not a thing of recent growth. 
The arbitration clause in all policies, by which the companies seek to substitute 
an impartial board of arbitrators for a prejudiced jury, is of long standing, and 
the outgrowth, undoubtedly, of this very prejudice. Why, then, is it, one nat- 
urally asks, that this prejudice exists? In my opinion, it is the result of two 
causes : — 

First. The erroneous impression already referred to, that these companies do 
not pay their losses when able to escape therefrom, such impression arising from 
the non-payment by weak or what might properly be called mushroom companies 
of their losses, and the further fact that men always blazon forth to the world 
cases of non-payment, which they consider an injustice, while they remain silent 
in regard to prompt payments, which they take as their just dues ; and — 

Second. More potent than all other causes combined in producing the preju- 
dice spoken of is that other proposition which I have stated, — the ignorance of 
the assured, as a class, of the nature of an insurance contract and the limited 
liability assumed under the policy by the insurers. And here we may well pause 
to marvel that such should be the case. No. contract is so common or so often 
entered into as that of insurance, and yet none so little understood. Men, and 
intelligent men, too, who in the ordinary concerns of life, would not enter into a 
lease or a contract to build a house without submitting it to their lawyer, enter 
into this most complicated of contracts without so much as reading it. I remem- 
ber once at the conclusion of a trial in which the defense of the company was a 
breach of one of the conditions of the policy, a very intelligent man, who had 
been a witness upon the trial, said to me : "I have been insured for years, but 
have never read one of my policies. I will go home and read those I now have 
to see where I stand." And I can say for myself, that although I have always 
insured, I never, prior to directing my attention to the law of insurance, have 
read any of the policies issued to me. The prevailing idea, and in the existing 
state of ignorance to which I have referred, not unnaturally so, is, that if the 
assured has paid the premium, and a fire occurs without any fault upon his part, he 
should receive payment for his loss, notwithstanding that the policy may have 
been avoided by the breach of its material conditions. And this is particularly 
so if the fire was not the immediate result of such breach. And yet the insurance 
company, which, in consideration of a very small premium, has assumed a heavy 
risk, is perfectly justified in saying to the assured: "I agreed to pay the sum 
specified in your policy, upon certain conditions, and upon those conditions only ; 



80 SEVENTH ANNUAL MEETING. 

the conditions upon which I agreed to pay do not exist ; I am not legally liable, 
and therefore I will not pay." 

I think that this ignorance upon the part of the mass of the people who insure 
arises primarily from two causes : — 

Firsf. Fj;om the misrepresentation of insurance brokers or middlemen ; and — 

Second. From the form of the insurance contract. 

The competition for business is very severe ; and the broker who is seeking to 
obtain a risk will not go very far in pointing out to the assured the many things 
necessary to be done to bring himself within the terms of his policy. His, the 
the broker's, object is to get the business and earn his commission ; and the policy 
being underwritten he will do little more than hand it to the insured with the 
statement that he is now protected. In the majority of cases the broker's sins are 
those of commission, — positive misrepresentation ; — but the sins of omission, in 
failing to inform the assured upon important points are the prevailing trouble. But 
the form of the insurance contract is, I think, the underlying cause of the ignor- 
ance and prejudice to which I have heretofore referred ; it is this which is most 
misleading to the assured. In entering into other contracts, he is consulted as to 
their terms, and when drafted they are carefully read over by him in order that 
he may see that he has not bound himself unwittingly. He then signs it in the 
presence of witnesses, and, in some cases, records it. A contract entered into 
with these formalities impresses him with the idea of participation and voluntary 
agreement. But such is not the case with the contract of insurance. Having 
given the risk to a broker, a paper called, not a contract or agreement, but a 
"policy of insurance," is brought to him. He has not been consulted as to its 
terms ; he has not signed it ; it is an agreement — so he thinks — issued to him by 
the insurance company, wherein, in consideration of the premium paid he is to 
receive, in case of loss, a certain amount of money. He does not consider this 
as a contract in which he is to perform any affirmative act ; and if he does read 
the policy it is doubtful whether he intelligently understands the meaning and 
import of the terms and conditions therein contained. 

You will of course understand that I am here referring to this state of affairs 
as an existing fact and not in any spirit of unfriendly criticism. Now the princi- 
pal cause of popular complaint in regard to the matter which I am now discussing ; 
to wit, the form of the policy, is, in addition to the want of mutuality, the mass 
of conditions, not well understood, limiting and defining the liability of the com- 
panies. These conditions are the weak point in every case tried before a jury. 
Counsel against the company invariably hold up the policy to the inspection of 
the jury, display the long list of conditions, and assert that no man can tell after 
reading them whether he is or is not, nor upon what terms he is insured. Of 
course every one familiar with the matter knows that all these various conditions 
and the exact phraseology in which they are framed are the outgrowth of the 
necessities and experience of the business and of judicial interpretation ; but the 
assured, ignorant of the history or underlying principles of the insurance contract, 
sees only a vast mass of provisions exempting the company from liability, and in 
many instances upon apparently technical grounds. With the making of these 
conditions the insured has had nothing to do. They are not talked of with 
him ; he has not, in his own mind, agreed to them in the sense of contracting. 
He must accept the policy on the terms therein specified or not at all. He re- 



SUGGESTIONS UPON THE INSURANCE CONTRACT. 81 

ceives it just as he buys a government bond, relying entirely on the financial 
soundness and good faith of the promisor, — the company. When the loss occurs 
and he is told by the company that he cannot be paid because of the breach of 
some condition of the policy, in seven cases out of ten the answer is either, "I 
"did not know of this condition; I supposed I was insured, and did not read the 
"policy ;" or, "the loss did not occur by reason of the breach named." This is a 
good enough reason for the jury, but of course should not prevail with the court. 
But the courts are more or less in sympathy with the policy-holder in this plea ; and 
the outcome of such sympathy upon the part of the courts is the doctrine of 
"waiver," so liberally applied of late years to save the forfeiture of policies for 
breach of condition. And so rapidly is the application of this doctrine of "waiver" 
and its twin sister, "estoppel," being extended, that unless something be done to 
check the growing prejudice against insurance companies in litigated cases the 
insured with a good attorney to back him will be able to manufacture a "waiver" 
to meet the necessities of every contested case. The query naturally arises, 
wherein is the remedy ? It has often seemed to me that if the companies would 
simplify the conditions attached to the policy, making them more comprehensive 
in their general scope while avoiding the mass of detail now indulged in, and 
would in form make the policy what it now is in fact, a mutual contract, much 
of the prejudice heretofore referred to would necessarily be disarmed. If the 
insured upon receiving his policy were compelled to sign upon its face a stipula- 
tion somewhat in this form, "this policy is accepted by the insured therein 
"named, subject to all the conditions therein specified, and in case of loss the 
"insurer is to be held liable only in case of compliance by said insured with said 
"conditions," with what grace could he appear in court in a suit defended by the 
company upon the ground of breach of condition and say, as he now invariably 
does, "I did not read my policy," or, "I did not understand the conditions 
thereof ;" and yet every one familiar with insurance litigation knows that upon 
these two foundations, — the failure to read the policy, and ignorance of the full 
scope of the conditions thereof, rest the majority of the verdicts against the 
insurance companies. The ignorant jury sympathizes with its companion in 
ignorance, the policy-holder, and the result is an ignorant verdict. The cry is, 
"the company agreed to pay this man in case of loss ; the loss has occurred, let 
"them pay." It is never considered that the contract is a qualified one ; and 
the truth is that the majority of the people do not so consider it. But if a man 
were compelled to sign such a stipulation as I have suggested, he would be 
charged with notice of the contract he was making, and would, moreover, 
himself take the trouble to learn the nature and extent of it. It may be said 
that there is sufficient in the policies now to charge the insured with notice. 
This is true ; but the answer is,- that the majority of people receiving policies do 
not read them ; but if they were compelled to sign such a contract as I have sug- 
gested, they would read them. 

Another suggestion which if adopted would, in my opinion, render the rela- 
tions between insured and insurer more harmonious, would be the adoption by 
companies doing business in this State of identical forms of policy ; and this would 
certainly be advisable in case of concurrent policies upon the same risk. The 
conditions of the policies of the various companies are now so diverse, that the 
insured holding a number of them upon the same risk frequently finds it difficult 



82 SEVENTH ANNUAL MEETING. 

to determine upon what conditions the several companies are really liable. One 
great advantage of similar forms of policy in the same State would be that in 
course of time the various provisions of such form would receive judicial interpre- 
tation and be thoroughly understood in their full scope and intent. It has recently 
been suggested that the Legislature of the State should provide for some specific 
form of policy ; but the better plan would be for a mixed committee of insurance 
men and lawyers familiar with the subject to prepare a policy which would be 
acceptable to the various companies. I am of the opinion that a form so prepared 
could be made sufficiently comprehensive to embrace every safeguard necessary, 
while dispensing with a great mass of matter now unintelligible to the insured as 
a class. 

I desire to add only one other suggestion relative to this subject of insurance 
litigation. Some companies, although I think not many, contest losses other- 
wise honest upon purely technical points ; others pay losses dishonestly made 
rather than incur what they deem to be the odium of a lawsuit. The former 
case only generates prejudice; the latter is a direct incentive to incendiarism and 
every class of fraud known to the insurance business. In my judgment every 
dishonest loss should be contested to the last point. House burners and fraud- 
ulent insurers should be taught that they will be compelled to pay as much as 
they can recover; and a perceptible reduction in the number of incendiary fires 
would be the result. Upon the other hand, if every honest loss was paid, even 
although a technical avoidance of the policy were possible, the better sense of the 
people would soon teach them that insurance companies did not contest other 
than dishonest losses, and house burning would cease to be the fashion that it has 
of late years become. ' 

And now in conclusion permit me to say that I regret not having been able to 
cast this communication in a more perfect mould, but professional and other 
engagements have rendered it impossible to do more than give you the foregoing 
rough outline of thoughts which are worthy of a much more perfect exposition. 
Trusting, however, that this communication may serve such purpose as you desire. 
I am, sir, very repectfully, your obedient servant, 

T. a Van Ness. 

Mr. W. L. Chalmers : I move that a vote of thanks be 
tendered Mr. Van Ness for this very excellent paper. 

The motion was carried. 

Mr. J. W. Staples reads the paper of Mr. W. J. Brodrick, of 
Los Angeles, entitled, — 

UNDERWRITING FROM A LOCAL AGENT'S POINT OF 

VIEW. 

Mr. President and Members of the Fire Underwriters Association of 
the Pacific: — 
Gentlemen, — Your association is, I believe, composed of gentlemen represent- 
ing all the fire insurance companies doing business on the Coast. The writer is 
local agent for Board companies only, and his views may probably be mistaken 
ones ; he therefore presents them in the most timorous and humble manner. 



UNDERWRITING FROM A LOCAL AGENT'S VIEW. 83 

Is it not a very generally accepted fact that the newly appointed local agent 
is not supposed, or at any rate not required, to possess much knowledge of the 
business in which he is about to engage ? Nobody will venture to deny that the 
duties of the special agent are arduous and difficult, and that he is continually 
engaged in conscientious efforts to advance the interests of his company — he 
works hard, putting in more minutes to the hour, more hours to the day (and in 
the night, too, for that matter) than most professional men; meets disappoint- 
ments and rebuffs with the resignation of a philosopher {sometimes) and comes to 
the front smiling every time. 

But how often does it happen that the special, wishing to place his agency, 
reaches a country town, and finding the field apparently occupied, searches for 

AND APPOINTS A NEW MAN? 

A rate-book and policies are handed to the appointee. Supplies, and a big sign, 
are furnished, and after a not very long time devoted "to instructions " the new 
agent is ready for "business." He starts out (the agent), drops into the store of 
his personal friend Jones, tells him he has just been appointed agent for the So and 
So Fire Insurance Company, " the best in the world! " and asks him what rate he 
is paying. Jones, who is in the dry goods business (frame range of 3), says 3f per 
cent. The new agent turns to his rating for dry goods. Whew!! says he, your 
rate should only be 2 J per cent, and they've been swindling you. "Look at the 
book. " Jones, who has probably been paying the 3| per cent to Agent Smith for 
several years, immediately hunts him up, and after a long and tedious explana- 
tion departs, only half convinced that he hasn't been imposed upon. 

Sometimes Jones will cancel his policy in the old company and give his 
newly-appointed agent friend a risk at the lower rate ; if both agents represent 
Board companies, Smith reports the deviation, and that is the end of the chapter. 
That risk is gone from Smith forever. 

Why not require some qualification from the local agent before entrusting 
him with policies and authority to issue them ? In the opinion of this local 
agent, the practice of permitting board and non-board companies to be repre- 
sented in the same agency works injuriously to both. 

We all know that the average property-owner, when given a rate, will com- 
plain that it is too high; that he can do better, etc., etc. He doesn't always mean 
what he says, nor believe it, and the agent who has only one class of indemnity 
in his shop can very often, by patient explanation, convince his customer that the 
rate is just. On the other hand, if he has two kinds, it is only human for him to 
"fall down," when there is danger of losing the risk, and offer a lower rate. 
The non-board company suffers in reputation, for the agent who represents both 
is forced to admit that one policy is inferior indemnity to the other. What 
else can he say ? Can he insist that the security offered by each company is 
equally good, claiming that his board company charges a rate much higher than 
experience has proven the risk to be worth, in order that a large surplus may be 
provided or that fat dividends be divided among the stockholders ? (He isn't 
loyal if he makes use of such argument. ) Or will he contend that his non-board 
company is controlled by men who, actuated by a high sense of honor (and no 
wish to make money), have no desire to exact any greater premium than the in- 
demnity furnished is worth ? 



84 SEVENTH ANNUAL MEETING. 

In either case, is not the party seeking insurance somewhat justified in enter- 
taining a shadowy belief that the business of insurance is a queer one anyhow, 
based <>n no well-defined principles, but left entirely to the caprice of the indi- 
viduals having jcharge of the company's affairs? Has he not cause to doubt 
whether the lower rate offered is not, in itself, much higher than it should be, 
and greater than the non-board company would ask him to pay if yet another 
company could be found to take the risk for less ? 

Let the Board and non-Board agencies be separated, each standing on its own 
bottom, and it will be better for all concerned. 

The writer had intended asking some conundrums about the manner in which 
a basis is arrived at for the payment of commissions to local agents. Whether 
the local, who is paid 20 per cent or 25 per cent commission, allowed office rent, 
buggy hire, and liberal advertising, is supposed to do the most business, and if so 
whether the additional outlays result in profit to his companies. 

But these are unimportant trifles, and I refrain. 

How would it do for the respected President of your Association to send out a 
circular to each local agent on the Coast, asking him to participate in a " Con- 
vention of Locals " to meet in your city some time during the coming Summer ? 

The convention might "be held under the auspices of your body, and no doubt 
many " Locals " would avail themselves of the opportunity to meet their fellow- 
workers in the vineyard and discuss matters of interest to themselves. After 
being "braced up" by their Chiefs they would return home, refreshed and 
encouraged to carry on the battle anew. 

Hoping that you will have a pleasant meeting, and with best wishes for the 
success of your organization, I subscribe myself, Local Agent. 

Mr. C. D. Haven : This is certainly a paper of no mean 
ability ; and I move that Mr. Brodrick be elected an honorary 
member of this Association, and that the rules be suspended and 
the Secretary cast the ballot of the Association. 

The motion was carried, and Mr. W. J. Brodrick declared 
elected. 

The President: Before we adjourn, let me say Mr. Sexton's 
paper, on the apportionment of non-concurrent policies, will be 
worth hearing. This subject has been a bug-a-boo to insurance 
men ; but we hope we have a solution of the problem through 
Mr. Sexton. 

Mr. T. A. Mitchell . I suggest that Mr. T. C. Grant be in- 
vited to prepare a paper in reply to the paper read by Mr. 
Nichols. 

Mr. Grant is requested to prepare a paper. 

On motion, adjourned to 2.15 P. M. 



REMARKS OF MR. E. E. POTTER. 85 

AFTERNOON SESSION, 

The meeting was called to order at 2.15 P. M. 
The President : Please give your attention, gentlemen, to 
the remarks of Mr. E. E. Potter. 

Mr. E. E.Potter: — 

Mr. President and Gentlemen : Not having been able to be present to 
listen to the reading of the interesting communications of this session, and in 
time only to catch a portion of the interesting contribution of Mr. Van Ness, 
prompts me to make just a few suggestions ; and in doing so I may touch on and 
perhaps repeat some things that have already been said. Referring to Mr. Van 
Ness' suggestion, that both the assured and company subscribe to the policy, I 
beg to state that I adopted this custom in part several years ago, and am to-day 
using it, so far as relates to growing-grain policies. My object in so doing was to 
estop the assured when the loss occurs from saying that he did not answer such 
and such questions in his application ; a duplicate of the questions and his 
answers are on the back of his policy, and to which he subscribes his name. 
Would say that this system among Life Insurance Companies prompted my 
action in this direction. 

Another clause contained in the policies of the " Sun" Insurance Company, of 
which I am Secretary, is: " In case of total destruction by fire of the building 
"herein insured, and this Company shall pay a less amount than the amount 
"insured thereon, this Company shall refund to the assured one year's premium 
" on the difference in the amount insured on such building, and the amount paid." 
We all know that in court the one thing governing most juries is, if the Company 
took the premiums on one thousand dollars, they should pay one thousand dol- 
lars when the loss occurs. This clause I think will present a claim of fairness on 
the part of the Company, and tend to throw the responsibility of over-insurance 
on the assured. Another clause I have adopted in my policy would, I think, 
before a jury benefit us ; namely, defining who is agent of the Company. We 
are aware that most policies state that "any person, other than the assured 
and," etc., " shall be deemed to be the agent of the assured," etc., to which I add : 
' ' Unless he or they are salaried employees or are regularly commissioned agents. " 
It is folly to suppose that either of the latter are agents of the assured. The 
jury therefore very sensibly remark that under the ordinary form no distinction 
is made ; that they have done so is, I think, partially the fault of the companies. 

I believe it possible to bring the matter of insurance on buildings in such a 
light before our legislators that they will understand that it is purely a matter of 
indemnity ; that for public safety the assured should be co-insurer ; and that in- 
stead of passing a valued policy bill, they will pass one providing that the assured 
in no case shall recover more than three-fourths of the value of the building in- 
sured, the same being totally destroyed ; and I affirm that my loss return 
premium clause, to which I have just referred, would assist the passage of such 
a bill ; this might possibly be limited to the building where the fire originated. 
A few words more on the building question and I am through. Since companies 



86 SEVENTH ANNUAL MEETING. 

have adopted the practice of the " Compact System," in the Eastern States, and 
have found that they are not sufferers by one man, or a department, passing on 
all of their risks in that department, would it not be valuable to those of us who 
are not familiar with, or incompetent to judge, the value of buildings, to add to 
this rating department a building expert, whose duty it should be to estimate on 
applications on buildings, and investigate such as would seem to him to be over- 
insured ? It is not a difficult matter to make a fair estimate when the dimensions 
and character of the building are stated in the application. Taking into con- 
sideration the slight changes in values in different localities, a practice which 
some of us have followed for years, a good mechanic would, in most cases, be 
able to judge whether a building is over-insured by merely glancing at the di- 
mensions, etc. The expense, I judge, would be insignificant with the amount 
saved from incendiary work, as well as by law suits and dissatisfaction after the 
loss occurs. 

Some years ago I called your attention to the "Hazard" family. That so 
long as some companies adopted one classification, others another, and still 
others none, it indicated nothing but a non-concurrent policy ; and where loss 
occurred the assured damned the whole hazard family. Now, I observe, in the 
last issue of the Monitor, that some of the companies are changing their classifica- 
tions and renewing their policies without notifying the assured ; and the query 
is, in case of loss, — in what position will the assured be ? Why is it not simpler to 
say, "on their stock of dry goods, and other merchandise not more hazardous, or 
such as is usually kept in a dry goods store ? " As it is now, often when the 
Daily Report comes in from a distant point, worded hazardous, non-hazardous, 
and extra-hazardous, the company is puzzled to know how to classify the risk, 
not knowing whether it is a wholesale dry goods, grocery, or millinery store. 

Mr. C. Mason Kinne read his paper, — Science and Under- 
writing ; or, Microscopic Hazards. 

Mr. C. Mason Kinne : — 

Mr. President and Gentlemen : As a prelude, I want to state that if 
there is anything that gives me more satisfaction than another, — and 
you are nearly all in the same boat, — it is the fact that I was born 
between forty and fifty years ago ; that at that particular time one of 
the most intricate laws of nature brought me into being. In the last half 
century there has been more thought and attention paid to scientific research, 
and with better results, than ever before, particularly in the way of applying 
steam and electricity. We have the telephone and electric light brought into 
every-day life; and we also find the spectroscope and microscope are made sub- 
servient to practical uses. Among the most important, perhaps, is the micro- 
scope. The botanist, geologist, physiologist and entomologist, and all the differ- 
ent departments of science, are made to feel the great importance of the micro- 
scope. I have naturally alluded to these matters from the fact that I have, 
perhaps foolishly, given some little thought to scientific research ; and among the 
matters that I have devoted the most attention to are those that would properly 
come under the field of the microscope ; and growing out of this fact comes the 
paper that I shall read to you, and which is a brief compliance with the demands 
of vour President. 



SCIENCE AND UNDERWRITING. 87 

SCIENCE AND UNDERWRITING; OR, MICROSCOPIC 
HAZARDS. 

To any one whose heart is in his work, whose whole efforts and thoughts are 
directed in the way of trying to know more of his profession and the little details 
and causes which go to make up the grand total, perhaps there is no more 
fruitful field than in the very business of Fire Underwriting, which claims the 
attention of each one of us. It is a peculiar occupation, — one which reaches out 
in a thousand different directions afid is at once a profession and a tutor. To the 
Special Agent and Adjuster, particularly, does it teach self-reliance, habits of 
careful thought and pertinacity. 

Whatever I shall present to you in this paper is an evidence of the latter 
quality, which has become thoroughly developed in the genial gentleman whose 
official term as our Presiding Officer closes to-day. He began his operations 
months ago by insisting that I should prepare something for to-day, and then 
proceeded to coolly map out the work by suggesting a theme. 

While in the broad domain of science there is hardly a branch which does not 
have an important bearing on the causes of fires, from the chemistry of sponta- 
neous combustion and carbonized wood, to the philosophy of friction, and the rapid 
combustion and consequent explosion of minutely divided particles of organic 
matter, we find by looking closer a series of facts that bear upon causes of fires 
and depreciation of property which are often ignored. These causes are hidden 
and microscopic, being unseen and minute ; but scientific investigation uncovers 
the one and renders visible the other. 

I approach the matter with a certain degree of diffidence, not only from the 
fact that I make no great pretensions to scientific knowledge, but I fully realize 
that it is but occasionally, when some insect or vegetable plague makes its ravages 
very severely felt, that the ridicule which usually attaches to fly-catching and 
bug-hunting, or the gathering of obscure fungi, gives place to some temporary 
regard for these occupations, and then only is the entomologist or botanist subsi- 
dized that he may discover the cause of the trouble. 

In the economy of nature, two forces are constantly at work ; aggregation of 
particles and disintregation of masses. Among the so-called hidden, because 
usually unseen, elements at work in the way of disintregation, the microscope has 
revealed the methods pursued and the paths traveled by minute forms of animal 
and vegetable life, which are often thought of little moment, by reason of being 
so minute and so insidious. Is it not with just such matters as these that the 
thinking insurance man should devote some attention ? 

If the lightning rend, the tornado raze, or the floods sweep away any tangible 
property, its change of condition is so palpable that there is usually no disagree- 
ment as to a destruction or depreciation in value. Yet the fungus, with my- 
celium spreading through the cell-structure of the plant or timber ; the insect 
wood-borer tunneling its devious course with many dips, spurs and angles ; the 
teredo and limnoria feasting on the woody fibre of submerged structures, are all 
fulfilling their destiny in their personal struggle for existence, and tearing down 
no less surely than the more palpable forces in nature, what other days have 
built up. 



88 SEVENTH ANNUAL MEETING. 

But do these facts have any bearing upon insurance and insurable property ? 
Have Underwriting and Science any interests in common ? Let us see. If the 
microscopic world is teeming with its myriad forms of life, they can aggregate a 
force greater than the storm, as effectual to destroy as the lightning or the flood. 
Slower, but none the less sure, does the destruction take place. They change 
the physical hazard in many cases, and have an important bearing on the moral 
hazard in others. Their approaches are so insidious that statistics are at fault, 
and j'et the loss almost certain. We know that a well-constructed building in 
the course of time settles unevenly, and changes occur in the original plan and lines. 

A cannery burns; cause, " defective brick- work in heating appliances." A 
few years ago the whole affair was new. The most skilled mechanics used the 
best of bricks and mortar, and fire-places and chimneys were solid and true ; 
the foundation was placed at great expense, the piling and timbers sound and 
substantial. But the embryo teredo navalis comes swimming along in the brackish 
water and lodges in the irregularities of the supporting pile. It is no longer a 
wanderer seeking for a home ; but in excavating one it is at once furnishing itself 
with food and a domicile. Cutting and carving the toothsome fibres with its 
calcareous sheath, the happy mollusk breathes through its tail and revels in the 
consciousness of a life well spent. The limnoria adds its drifts and shafts of 
minuter caliber ; the substructure is torn and weakened, unequal pressure is the 
inevitable result, while cracked fire-places and tottering chimneys cause a fire and 
destruction of property already damaged and depreciated by these hidden micro- 
scopic forces. 

One of the finest insurance offices in the far West is finished with California 
laurel, — "no two pieces alike," — and the beauty and strength thereof were com- 
mensurate with its cost. Partial destruction and consequent depreciation ensues, 
and what is the cause ? The ovipositor of a tiny wood-boring beetle placed the 
egg of its progeny in the living tree while beautifying the sunny slopes of the 
Sierras, and the insatiable jaws of the diminutive but growing larvae of the lusty 
coleoptera accomplish the unlooked-for and astonishing result. The mature laurel 
wood-borer continues the work, and the deterioration goes on to this day, while 
the powdered fibre at once denotes the refuse dump at the mouth of the wooden 
tunnel and the damaging efforts of the insect artisan. 

A quartz mill, a flour mill, a factory or machine shop, all have their inherent 
and manifest physical hazards, in addition to the great and ever-present moral 
hazard which pervades everything and permeates through the whole business of 
underwriting; but the hidden elements make themselves felt here as well. Away 
from the light of day, the parasitical merulius lacrymans, or dry-rot fungus, is 
plying its avocation, sending its subtile threads of mycelium deep into the tissues 
of the woody substance ; and the natural decay of the organic matter is accele- 
rated. Some of these wood-destroying fungi completely devour the tissue, so to 
speak, while others alter its nature so much that it becomes loose and friable. In 
either case, the strength of the timber is rapidly destroyed, a corner or other part 
of the building sags a little, the bearings are out of true, and unthought-of depreci- 
ation and physical hazard results. This applies to all structures with wooden 
foundations ; and from the cheapest dwelling to the most expensive factory, none 
should be built except on brick or stone walls or piers. 

But perhaps one of the most rapid and erratic parasites that effect insurable 



SCIENCE AND UNDERWRITING. 89 

property is the trichobasis vera, a microscopic fungus, commonly known as 
4 'rust." The "wheat mildew" and the "smut" are destructive, but slow in 
their development, which enables the careful local agent to find evidences of the 
existing trouble, when he properly examines a field of standing grain. But the 
rust attacks cereals, wheat particularly, without any warning. When it is re- 
membered that from a particle of matter, not the 2-1000 part of an inch in di- 
ameter, a good-sized puff-ball, or mushroom, will grow in a night, and that a few 
hours is often time enough for the peronaspora infestans, or " potato blight," to do 
its work, the sudden appearance of the rust in a field of wheat may be understood. 

The air is filled with the spores which find a lodgment in every field. Their 
development depends on certain conditions, such as a damp, foggy morning, with 
a sultry, or what is called a "muggy," day following. Twenty-four hours will 
serve for the growth and fruition of the fungus ; and with its mycelial rootlets 
penetrating the cell structure, the ripening spores break through the cuticular 
envelope ; the plant is riven and torn ; the juices of its life sapped and destroyed, 
and the promising field of grain is ruined or damaged so that it will not pay for 
cutting. It has been, perhaps, properly and honestly insured; and yet now arises 
a moral hazard which was not contemplated at the outset. If not this, one of the 
contiguous fields is owned by a man who cannot withstand the temptation, and 
a fire is the result, — ' ' cause unknown, " with a hint at tramps. 

The destruction wrought by these few of the many tiny foes that could be 
mentioned can scarcely be over-estimated ; and aside from the moral hazard 
alluded to in the one case, and the physical hazard in the other, all heightened by 
the agencies referred to, and which properly come before the special agent, as an 
underwriter, the adjuster who realizes such elements as add to the ordinary and 
visible causes that render a building or articles less valuable, is prepared with new 
arguments, when called upon to silence, if not convince, a claimant of the 
propriety of causing depreciation to figure in an adjustment. 

After safely passing the Scylla of profits, how often are we wrecked on the 
Charybdis of depreciation ; therefore, let science be popularized as much as pos- 
sible. While we study the phases of risks in the way of our new methods of 
illuminating and heating buildings, the new compounds used in shops, canneries 
and laboratories, and the modern appliances in mills and factories, let us not for- 
get the little things that become great by their numbers and consequent aggre- 
tion of infinitesimal force, all directed toward disintregation and decay. 

If we learn the cause of a trouble, and science shows us what it is in these 
cases, the good result is twofold. The owner of property liable to such ravages 
can, if he will, take steps to reduce the decay to a minimum, and many times 
by chemical appliances, better ventilation, or more careful construction, erad- 
icate the evil entirely, while the underwriter can better regulate the proper rate 
when he knows the cause of a physical or moral hazard, and in other cases reduce 
amounts and finally cancel a risk that is getting worn-out. 

All this may be of no moment to some, abstruse to others, and pedantic to a 
few ; but if I succeed in starting a new train of thought in the minds of any of 
you, then I shall have brought some good into the business and will be satisfied. 

The President : I would like to hear some discussion on Mr. 
Kinne's paper. I confess I am unable to cope with his animal- 
cute, fungi and what not. I take his statements for granted. 



90 SENENTH ANNUAL MEETING. 

We are under obligations to Mr. Kinne for this paper ; like some 
others of you, he was exceedingly modest, and I did not feel sure 
of his paper until the last moment. 

Mr. E. W. Carpenter here read his paper on Machinery. 

Mr. Carpenter : — 

Mr. President and Gentlemen : Apologizing for what you have to say has 
a tendency to make your hearers think less of your efforts than they otherwise 
would ; andtl have no doubt but that you will think little enough of what I have 
to offer, anyway. But I can't refrain from honestly confessing that I am dis- 
gusted. When the President asked me to prepare something for this meeting, I 
tried to do what I could and write out a paper that I thought might perhaps pass 
for a second average among the other papers read. But when I came here and 
heard the superior character of the other papers, I felt myself sinking into my 
boots and wishing my name had been left off the programme. If this paper 
serves to materially reduce the average merit of the intellectual entertainment 
attendant upon this meeting, you must lay the blame upon President Grant's 
shoulders. 



MACHINERY. 

Underwriters have given a full share of their attention to machinery as a sub- 
ject for insurance and loss adjustment. It is now desired to call your attention 
thereto as a means for manufacturing insurance dividends out of property- owners' 
coin. You are asked to briefly inspect the machinery of underwriting. 

Each insurance company is a machine that has been set up avowedly for some 
such purpose as supplying the public with better policies than they ever had 
before on more favorable terms, — confidentially (as between the stockholders), for 
the purpose of grinding out handsome dividends, and practically, in most cases, 
for the purpose of furnishing a position for the engineer. As a rule, this machinery 
fulfills its mission so far as the first and last are concerned ; but if the heavy work 
recently put upon it is to continue, the over-heating will very seriously interfere 
with the prospects of the stockholders, and the machine may be, in their case, a 
lamentable failure. Passing over its experimental tests, let us suppose it to be in 
full practical operation, an